Stock Analysis

Shareholders Would Not Be Objecting To Allegion plc's (NYSE:ALLE) CEO Compensation And Here's Why

  •  Updated
NYSE:ALLE
Source: Shutterstock

We have been pretty impressed with the performance at Allegion plc (NYSE:ALLE) recently and CEO Dave Petratis deserves a mention for their role in it. Shareholders will have this at the front of their minds in the upcoming AGM on 03 June 2021. The focus will probably be on the future company strategy as shareholders 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.

View our latest analysis for Allegion

Comparing Allegion plc's CEO Compensation With the industry

According to our data, Allegion plc has a market capitalization of US$13b, and paid its CEO total annual compensation worth US$8.8m over the year to December 2020. That is, the compensation was roughly the same as last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.0m.

On comparing similar companies in the industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$8.8m. From this we gather that Dave Petratis is paid around the median for CEOs in the industry. What's more, Dave Petratis holds US$34m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component20202019Proportion (2020)
Salary US$1.0m US$987k 12%
Other US$7.7m US$7.6m 88%
Total CompensationUS$8.8m US$8.6m100%

On an industry level, around 16% of total compensation represents salary and 84% is other remuneration. Allegion sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

ceo-compensation
NYSE:ALLE CEO Compensation May 28th 2021

Allegion plc's Growth

Allegion plc has seen its earnings per share (EPS) increase by 16% a year over the past three years. Its revenue is down 4.7% over the previous year.

Shareholders would be glad to know that the company has improved itself over the last few years. While it would be good to see revenue growth, profits matter more in the end. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Allegion plc Been A Good Investment?

Most shareholders would probably be pleased with Allegion plc for providing a total return of 86% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary...

Given the company's decent performance, the CEO remuneration policy might not be shareholders' central point of focus in the AGM. Instead, investors might be more interested in discussions that would help manage their longer-term growth expectations such as company business strategies and future growth potential.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 2 warning signs for Allegion that investors should look into moving forward.

Important note: Allegion is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

If you’re looking to trade Allegion, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted


Valuation is complex, but we're helping make it simple.

Find out whether Allegion is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis