In 2006 Daniel Jones was appointed CEO of Encore Wire Corporation (NASDAQ:WIRE). First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Daniel Jones's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Encore Wire Corporation has a market cap of US$848m, and reported total annual CEO compensation of US$2.9m for the year to December 2019. Notably, that's an increase of 9.2% over the year before. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$925k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. We examined companies with market caps from US$400m to US$1.6b, and discovered that the median CEO total compensation of that group was US$3.2m.
Now let's take a look at the pay mix on an industry and company level to gain a better understanding of where Encore Wire stands. On an industry level, roughly 29% of total compensation represents salary and 71% is other remuneration. Encore Wire is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation
That means Daniel Jones receives fairly typical remuneration for the CEO of a company that size. This doesn't tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context. You can see a visual representation of the CEO compensation at Encore Wire, below.
Is Encore Wire Corporation Growing?
Encore Wire Corporation has seen earnings per share (EPS) move positively by an average of 21% a year, over the last three years (using a line of best fit). It saw its revenue drop 1.1% over the last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Shareholders might be interested in this free visualization of analyst forecasts.
Has Encore Wire Corporation Been A Good Investment?
Given the total loss of 3.2% over three years, many shareholders in Encore Wire Corporation are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
Daniel Jones is paid around what is normal for the leaders of comparable size companies.
We like that the company is growing EPS, but we find the returns over the last three years to be lacking. Considering the the positives we don't think the CEO pays is too high, but it's certainly hard to argue it is too low. On another note, we've spotted 1 warning sign for Encore Wire that investors should look into moving forward.
Important note: Encore Wire may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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