Patrick Industries, Inc.'s (NASDAQ:PATK) CEO Compensation Looks Acceptable To Us And Here's Why

Key Insights

• Patrick Industries will host its Annual General Meeting on 16th of May
• Total pay for CEO Andy Nemeth includes US$817.3k salary
• Total compensation is similar to the industry average
• Patrick Industries' EPS grew by 6.6% over the past three years while total shareholder return over the past three years was 35%

Under the guidance of CEO Andy Nemeth, Patrick Industries, Inc. (NASDAQ:PATK) has performed reasonably well recently. As shareholders go into the upcoming AGM on 16th of May, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. Based on our analysis of the data below, we think CEO compensation seems reasonable for now.

See our latest analysis for Patrick Industries

Comparing Patrick Industries, Inc.'s CEO Compensation With The Industry

Our data indicates that Patrick Industries, Inc. has a market capitalization of US$2.6b, and total annual CEO compensation was reported as US$6.7m for the year to December 2023. Notably, that's a decrease of 14% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at US$817k.

In comparison with other companies in the American Auto Components industry with market capitalizations ranging from US$2.0b to US$6.4b, the reported median CEO total compensation was US$6.2m. So it looks like Patrick Industries compensates Andy Nemeth in line with the median for the industry. Furthermore, Andy Nemeth directly owns US$32m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	US$817k	US$833k	12%
Other	US$5.9m	US$7.0m	88%
Total Compensation	US$6.7m	US$7.8m	100%

On an industry level, roughly 13% of total compensation represents salary and 87% is other remuneration. There isn't a significant difference between Patrick Industries and the broader market, in terms of salary allocation in the overall compensation package. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

Patrick Industries, Inc.'s Growth

Patrick Industries, Inc. has seen its earnings per share (EPS) increase by 6.6% a year over the past three years. Its revenue is down 21% over the previous year.

We generally like to see a little revenue growth, but it is good to see a modest EPS growth at least. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Patrick Industries, Inc. Been A Good Investment?

Most shareholders would probably be pleased with Patrick Industries, Inc. for providing a total return of 35% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

The company's decent performance might have made most shareholders happy, possibly making CEO remuneration the least of the concerns to be discussed in the upcoming AGM. However, we still think that any proposed increase in CEO compensation will be examined closely to make sure the compensation is appropriate and linked to performance.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 3 warning signs for Patrick Industries that investors should think about before committing capital to this stock.

Switching gears from Patrick Industries, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.