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In 2007 Scott Bok was appointed CEO of Greenhill & Co., Inc. (NYSE:GHL). First, this article will compare CEO compensation with compensation at similar sized companies. Next, we’ll consider growth that the business demonstrates. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Scott Bok’s Compensation Compare With Similar Sized Companies?
According to our data, Greenhill & Co., Inc. has a market capitalization of US$500m, and pays its CEO total annual compensation worth US$7.3m. (This is based on the year to December 2017). While we always look at total compensation first, we note that the salary component is less, at US$600k. When we examined a selection of companies with market caps ranging from US$200m to US$800m, we found the median CEO compensation was US$1.5m.
Thus we can conclude that Scott Bok receives more in total compensation than the median of a group of companies in the same market, and of similar size to Greenhill & Co., Inc.. However, this doesn’t necessarily mean the pay 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 Greenhill has changed from year to year.
Is Greenhill & Co., Inc. Growing?
Greenhill & Co., Inc. has reduced its earnings per share by an average of 39% a year, over the last three years (measured with a line of best fit). In the last year, its revenue is up 42%.
As investors, we are a bit wary of companies that have lower earnings per share, over three years. But on the other hand, revenue growth is strong, suggesting a brighter future. These two metric are moving in different directions, so while it’s hard to be confident judging performance, we think the stock is worth watching. It could be important to check this free visual depiction of what analysts expect for the future.
Has Greenhill & Co., Inc. Been A Good Investment?
With a total shareholder return of 23% over three years, Greenhill & Co., Inc. shareholders would, in general, be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.
We examined the amount Greenhill & Co., 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.
Over the last three years returns to investors have been uninspiring, and we would have liked to see stronger business growth. Considering this, we wouldn’t want to see any big pay rises, although we’d stop short of calling the CEO compensation unfair. Whatever your view on compensation, you might want to check if insiders are buying or selling Greenhill shares (free trial).
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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. Thank you for reading.