We have been pretty impressed with the performance at CSW Industrials, Inc. (NASDAQ:CSWI) recently and CEO Joe Armes deserves a mention for their role in it. Coming up to the next AGM on 25 August 2021, shareholders would be keeping this in mind. It is likely that the focus will be on company strategy going forward as shareholders hear from the board and cast their votes on resolutions such as executive remuneration and other matters. In light of the great performance, we discuss the case why we think CEO compensation is not excessive.
Comparing CSW Industrials, Inc.'s CEO Compensation With the industry
At the time of writing, our data shows that CSW Industrials, Inc. has a market capitalization of US$2.0b, and reported total annual CEO compensation of US$3.6m for the year to March 2021. We note that's a small decrease of 5.1% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$581k.
For comparison, other companies in the same industry with market capitalizations ranging between US$1.0b and US$3.2b had a median total CEO compensation of US$4.1m. So it looks like CSW Industrials compensates Joe Armes in line with the median for the industry. What's more, Joe Armes holds US$12m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Talking in terms of the industry, salary represented approximately 16% of total compensation out of all the companies we analyzed, while other remuneration made up 84% of the pie. Our data reveals that CSW Industrials allocates salary more or less in line with the wider market. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
A Look at CSW Industrials, Inc.'s Growth Numbers
CSW Industrials, Inc.'s earnings per share (EPS) grew 11% per year over the last three years. Its revenue is up 31% over the last year.
Shareholders would be glad to know that the company has improved itself over the last few years. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has CSW Industrials, Inc. Been A Good Investment?
We think that the total shareholder return of 134%, over three years, would leave most CSW Industrials, Inc. shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.
Seeing that the company has put in a relatively good performance, the CEO remuneration policy may not be the focus at the AGM. In fact, strategic decisions that could impact the future of the business might be a far more interesting topic for investors as it would help them set their longer-term expectations.
CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 3 warning signs for CSW Industrials that investors should think about before committing capital to this stock.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.
When trading CSW Industrials or any other investment, use the platform considered by many to be the Professional's Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted
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.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.