In 2009 Todd Cleveland was appointed CEO of Patrick Industries, Inc. (NASDAQ:PATK). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. 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. This process should give us an idea about how appropriately the CEO is paid.
How Does Todd Cleveland’s Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Patrick Industries, Inc. has a market cap of US$1.2b, and reported total annual CEO compensation of US$6.9m for the year to December 2018. While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$690k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. When we examined a selection of companies with market caps ranging from US$400m to US$1.6b, we found the median CEO total compensation was US$2.6m.
It would therefore appear that Patrick Industries, Inc. pays Todd Cleveland 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. It could be important to check this free visual depiction of what analysts expect for the future.
You can see a visual representation of the CEO compensation at Patrick Industries, below.
Is Patrick Industries, Inc. Growing?
Over the last three years Patrick Industries, Inc. has grown its earnings per share (EPS) by an average of 24% per year (using a line of best fit). It achieved revenue growth of 5.1% over the last year.
This demonstrates that the company has been improving recently. A good result. It’s good to see a bit of revenue growth, as this suggests the business is able to grow sustainably.
Has Patrick Industries, Inc. Been A Good Investment?
Patrick Industries, Inc. has not done too badly by shareholders, with a total return of 7.3%, over three years. But they probably wouldn’t be so happy as to think the CEO should be paid more than is normal, for companies around this size.
We examined the amount Patrick Industries, 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.
However we must not forget that the EPS growth has been very strong over three years. We also note that, over the same time frame, shareholder returns haven’t been bad. While it may be worth researching further, we don’t see a problem with the CEO pay, given the good EPS growth. So you may want to check if insiders are buying Patrick Industries shares with their own money (free access).
If you want to buy a stock that is better than Patrick Industries, this free list of high return, low debt companies is a great place to look.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.
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