Louis Gries has been the CEO of James Hardie Industries plc (ASX:JHX) since 2005. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we’ll consider growth that the business demonstrates. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Louis Gries’s Compensation Compare With Similar Sized Companies?
According to our data, James Hardie Industries plc has a market capitalization of AU$7.1b, and pays its CEO total annual compensation worth US$8.1m. (This is based on the year to 2018). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$950k. When we examined a selection of companies with market caps ranging from US$4.0b to US$12b, we found the median CEO compensation was US$3.0m.
It would therefore appear that James Hardie Industries plc pays Louis Gries 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 get a better idea of how generous the pay is by looking at the performance of the underlying business.
The graphic below shows how CEO compensation at James Hardie Industries has changed from year to year.
Is James Hardie Industries plc Growing?
James Hardie Industries plc has reduced its earnings per share by an average of 14% a year, over the last three years. It achieved revenue growth of 17% over the last year.
Sadly for shareholders, earnings per share are actually down, over three years. And while it’s good to see some good revenue growth recently, the growth isn’t really fast enough for me to put aside my concerns around earnings. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO.
It could be important to check this free visual depiction of what analysts expect for the future.
Has James Hardie Industries plc Been A Good Investment?
James Hardie Industries plc has not done too badly by shareholders, with a total return of 5.5%, over three years. But they probably don’t want to see the CEO paid more than is normal for companies around the same size.
We examined the amount James Hardie Industries plc pays its CEO, and compared it to the amount paid by similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.
Earnings per share have not grown in three years, and the revenue growth fails to impress us.
And shareholder returns are decent but not great. So we think more research is needed, but we don’t think the CEO underpaid. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at James Hardie Industries.
Or you might prefer gaze upon this detailed graph of past earnings, revenue and cash flow .
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.