Allan Merrill has been the CEO of Beazer Homes USA, Inc. (NYSE:BZH) since 2011. First, this article will compare CEO compensation with compensation at similar sized companies. Then we'll look at a snap shot of the business growth. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.
How Does Allan Merrill's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Beazer Homes USA, Inc. has a market cap of US$409m, and reported total annual CEO compensation of US$6.2m for the year to September 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$949k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$200m to US$800m. The median total CEO compensation was US$1.8m.
It would therefore appear that Beazer Homes USA, Inc. pays Allan Merrill more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.
The graphic below shows how CEO compensation at Beazer Homes USA has changed from year to year.
Is Beazer Homes USA, Inc. Growing?
Beazer Homes USA, Inc. has reduced its earnings per share by an average of 84% a year, over the last three years (measured with a line of best fit). Its revenue is up 3.1% over last year.
Sadly for shareholders, earnings per share are actually down, over three years. The modest increase in revenue in the last year isn't enough to make me overlook the disappointing change in earnings per share. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Shareholders might be interested in this free visualization of analyst forecasts.
Has Beazer Homes USA, Inc. Been A Good Investment?
Beazer Homes USA, Inc. has generated a total shareholder return of 21% over three years, so most shareholders would be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.
We examined the amount Beazer Homes USA, Inc. pays its CEO, and compared it to the amount paid by similar sized companies. Our data suggests that it pays above the median CEO pay within that group.
Earnings per share have not grown in three years, and the revenue growth fails to impress us. While shareholder returns are acceptable, they don't delight. So you may want to delve deeper, because we don't think the CEO pay is too low. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Beazer Homes USA (free visualization of insider trades).
If you want to buy a stock that is better than Beazer Homes USA, this free list of high return, low debt companies is a great place to look.
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