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Jon Vrabely has been the CEO of Huttig Building Products, Inc. ( NASDAQ:HBP ) since 2007, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Huttig Building Products.
Comparing Huttig Building Products, Inc.'s CEO Compensation With the industry
According to our data, Huttig Building Products, Inc. has a market capitalization of US$65m, and paid its CEO total annual compensation worth US$771k over the year to December 2019. That's a notable decrease of 37% on last year. In particular, the salary of US$600.0k, makes up a huge portion of the total compensation being paid to the CEO.
For comparison, other companies in the industry with market capitalizations below US$200m, reported a median total CEO compensation of US$745k. This suggests that Huttig Building Products remunerates its CEO largely in line with the industry average. What's more, Jon Vrabely holds US$2.6m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
On an industry level, roughly 22% of total compensation represents salary and 78% is other remuneration. According to our research, Huttig Building Products has allocated a higher percentage of pay to salary in comparison to the wider industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
A Look at Huttig Building Products, Inc.'s Growth Numbers
Over the last three years, Huttig Building Products, Inc. has shrunk its earnings per share by 75% per year. In the last year, its revenue is down 5.1%.
Overall this is not a very positive result for shareholders. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Huttig Building Products, Inc. Been A Good Investment?
Given the total shareholder loss of 67% over three years, many shareholders in Huttig Building Products, Inc. are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be less generous with CEO compensation.
As previously discussed, Jon is compensated close to the median for companies of its size, and which belong to the same industry. In the meantime, the company has reported declining EPS growth and shareholder returns over the last three years. We'd stop short of saying compensation is inappropriate, but we would understand if shareholders had questions regarding a future raise.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 4 warning signs for Huttig Building Products (2 are concerning!) that you should be aware of before investing here.
Important note: Huttig Building Products is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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