In 2014 Tom Hill was appointed CEO of Summit Materials, Inc. (NYSE:SUM). First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. 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.
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How Does Tom Hill's Compensation Compare With Similar Sized Companies?
According to our data, Summit Materials, Inc. has a market capitalization of US$2.0b, and pays its CEO total annual compensation worth US$4.7m. (This number is for the twelve months until December 2018). That's a modest increase of 4.5% on the prior year year. While we always look at total compensation first, we note that the salary component is less, at US$900k. When we examined a selection of companies with market caps ranging from US$1.0b to US$3.2b, we found the median CEO total compensation was US$4.0m.
So Tom Hill is paid around the average of the companies we looked at. 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 Summit Materials, below.
Is Summit Materials, Inc. Growing?
Over the last three years Summit Materials, Inc. has grown its earnings per share (EPS) by an average of 6.4% per year (using a line of best fit). Its revenue is up 8.0% over last year.
I'm not particularly impressed by the revenue growth, but I'm happy with the modest EPS growth. Considering these factors I'd say performance has been pretty decent, though not amazing. Shareholders might be interested in this free visualization of analyst forecasts.
Has Summit Materials, Inc. Been A Good Investment?
Given the total loss of 20% over three years, many shareholders in Summit Materials, Inc. are probably rather dissatisfied, to say the least. It therefore might be upsetting for shareholders if the CEO were paid generously.
Tom Hill is paid around what is normal the leaders of comparable size companies.
The per share growth could be better, in our view. And it's hard to argue that the returns over the last three years have delighted. So it would take a bold person to suggest the pay is too modest. Shareholders may want to check for free if Summit Materials insiders are buying or selling shares.
If you want to buy a stock that is better than Summit Materials, this free list of high return, low debt companies is a great place to look.
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