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Is Graham Corporation's (NYSE:GHM) CEO Pay Fair?
Jim Lines has been the CEO of Graham Corporation (NYSE:GHM) since 2008. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.
Check out our latest analysis for Graham
How Does Jim Lines's Compensation Compare With Similar Sized Companies?
Our data indicates that Graham Corporation is worth US$133m, and total annual CEO compensation was reported as US$1.2m for the year to March 2019. While we always look at total compensation first, we note that the salary component is less, at US$435k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We looked at a group of companies with market capitalizations under US$200m, and the median CEO total compensation was US$608k.
Pay mix tells us a lot about how a company functions versus the wider industry, and it's no different in the case of Graham. On a sector level, around 16% of total compensation represents salary and 84% is other remuneration. According to our research, Graham has allocated a higher percentage of pay to salary in comparison to the broader sector.
It would therefore appear that Graham Corporation pays Jim Lines 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 better assess whether the pay is overly generous by looking into the underlying business performance. You can see, below, how CEO compensation at Graham has changed over time.
Is Graham Corporation Growing?
On average over the last three years, Graham Corporation has shrunk earnings per share by 42% each year (measured with a line of best fit). In the last year, its revenue changed by just 0.9%.
Unfortunately, earnings per share have trended lower over the last three years. And the flat revenue is seriously uninspiring. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. You might want to check this free visual report on analyst forecasts for future earnings.
Has Graham Corporation Been A Good Investment?
With a three year total loss of 33%, Graham Corporation would certainly have some dissatisfied shareholders. It therefore might be upsetting for shareholders if the CEO were paid generously.
In Summary...
We compared total CEO remuneration at Graham Corporation with the amount paid at companies with a similar market capitalization. Our data suggests that it pays above the median CEO pay within that group.
We think many shareholders would be underwhelmed with the business growth over the last three years. Arguably worse, investors are without a positive return for the last three years. This analysis suggests to us that the CEO is paid too generously! CEO compensation is an important area to keep your eyes on, but we've also identified 2 warning signs for Graham (1 shouldn't be ignored!) that you should be aware of before investing here.
Important note: Graham 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 editorial-team@simplywallst.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.
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. Thank you for reading.
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About NYSE:GHM
Graham
Designs and manufactures fluid, power, heat transfer, and vacuum technologies for chemical and petrochemical processing, defense, space, petroleum refining, cryogenic, and energy industries.
Flawless balance sheet with moderate growth potential.
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Trending Discussion
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anthony_x0j2w on Platform Group SE KGaA ·
Hello,(I am a shareholder).I spent the summer investigating in whatever I was able to find in the press, the trustee, or legal, and comparing it to FS Benner's declaration/transcripts:press: MM has a tendancy to use facts, modify them and turn them the way they want: 100% of their claims against TPG0 is traçable factually, 80% is flawed and interpreted. Example are numerous: 11M loans banks to be paid seems right, but it has not been an issue at all, it has been paid in full. (and it happens all the time in every business...); the previous HR becoming a financial director in the article herself being attacked by TPG on the legal side; the wrong address of curator (if truly announced by TPG).Trustee: according to my research (which can be incomplete) no communication to the Nordic trustee (hereby, bond holders) has been done on a, indebtedness (late payment) > 1M€, which is their obligation by contract (clause 14.d - https://corporate.the-platform-group.com/bond/) => this is a sign of a huge lie and fraud, or the sign that there is no indebtedness > 1M€ over the whole TPG group.Legal: still awaiting for an answer, probable that I won't get it.VALUATIONYou can spent hours working the fundamentals, if they're flawed...the thesis falls.Anyway, I always substracts the badwill (that I consider non-current - you have it in the CFS) & non-controlling interests from my valuation:Earnings ~22MFCF ~40M€The financial statements are not the issue here, we are more on an cheap option on the sincerity of the accounts that a real valuation. Unfortunately, these are unverifiable elements, hence the low price./!\ Careful:the accounts are consolidated and skip the subsidiaries issues...Careful with the business model: TPG0 is a financial holding that acquire subsidiaries, hold the debt, and has no operations. 100% of the Cash Flow comes from subs' dividends => it is a risk here, more a plumber risk than an operational one, but nevertheless...The auditor is too small, and managed by the same firm than before, with 140K€/year commission => it's too low, nobody external really reviewed what Benner and his team are doing internallycapital increase do not go through the CFS, but through change in equity AND equity in the BSIf the equity stays low too long, the WACC increase will be unbearable (I have a 30% global, with a 118% on equity): diluting is expensive => TPG machine can stay broken for a while.Most of the people I talk with never saw this, while this is ESSENTIAL to Benner's business model.SEVERAL EVENTS THAT COULD CHANGE:AEP is being audited by KPMG: if Benner plays the "we will propose KPMG to our shareholders BEOY", this can increase the trust in him significantly/KPMG (or other) to validate the 2026 IFRS accounts & having a word on HGB's: though still consolidated, at least we'll know...AEP being eventually acquired: while it carries a high integration risk due to its size, they talked about it so many times, that trust goes with it.Without this combination of event, the equity is doomed to stay at this level, IMO.Do not forget to also follow the bond: with TPG's announced safe harbor plan for buyback (25% of daily exchange), it is also interesting to check this illiquid and retail market: https://live.deutsche-boerse.com/bond/no0013256834-the-platform-group-ag-8-875-24-28?mic=XFRA
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Constantin_Mar on Platform Group SE KGaA ·
Quite a lot of speculation presented as if it were evidence.You are combining alleged payment disputes, alleged bank actions, legal disputes with journalists and other unverified claims to imply that TPG’s financial reporting is somehow unreliable or that the company is approaching insolvency. That’s a very serious conclusion, but the evidence you’ve presented doesn’t establish it.TPG’s financial statements, share count, debt, cash flow and acquisitions can all be checked against official filings and corporate documents. That’s called due diligence. Repeating allegations and then pointing to a low P/E doesn’t prove anything.In fact, the P/E below 1 is precisely the reason the underlying numbers need to be investigated rather than dismissed. If you have documentary evidence that TPG’s reported figures are false, that banks actually cancelled the alleged facilities, or that the company is insolvent, publish the documents and numbers.Otherwise, this reads less like analysis and more like an attempt to create fear and selling pressure around a micro-cap stock.Claims require evidence. Allegations are not evidence.
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