Should You Worry About Parker-Hannifin Corporation’s (NYSE:PH) CEO Pay?

Thomas Williams became the CEO of Parker-Hannifin Corporation (NYSE:PH) in 2015. First, this article will compare CEO compensation with compensation at other large companies. 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.

View our latest analysis for Parker-Hannifin

How Does Thomas Williams’s Compensation Compare With Similar Sized Companies?

Our data indicates that Parker-Hannifin Corporation is worth US$22b, and total annual CEO compensation is US$18m. (This is based on the year to June 2018). While we always look at total compensation first, we note that the salary component is less, at US$1.2m. We took a group of companies with market capitalizations over US$8.0b, and calculated the median CEO total compensation to be US$11m. There aren’t very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.

Thus we can conclude that Thomas Williams receives more in total compensation than the median of a group of large companies in the same market as Parker-Hannifin Corporation. However, this doesn’t necessarily mean the pay is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.

You can see a visual representation of the CEO compensation at Parker-Hannifin, below.

NYSE:PH CEO Compensation, September 6th 2019
NYSE:PH CEO Compensation, September 6th 2019

Is Parker-Hannifin Corporation Growing?

Parker-Hannifin Corporation has increased its earnings per share (EPS) by an average of 22% a year, over the last three years (using a line of best fit). In the last year, its revenue changed by just 0.1%.

This shows that the company has improved itself over the last few years. Good news for shareholders. It’s nice to see a little revenue growth, as this is consistent with healthy business conditions.

Has Parker-Hannifin Corporation Been A Good Investment?

Boasting a total shareholder return of 46% over three years, Parker-Hannifin Corporation has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary…

We compared total CEO remuneration at Parker-Hannifin Corporation with the amount paid at other large companies. Our data suggests that it pays above the median CEO pay within that group.

However, the earnings per share growth over three years is certainly impressive. In addition, shareholders have done well over the same time period. So, considering this good performance, the CEO compensation may be quite appropriate. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Parker-Hannifin.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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 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. Thank you for reading.