We Think The Compensation For The AZEK Company Inc.'s (NYSE:AZEK) CEO Looks About Right

Key Insights

• AZEK to hold its Annual General Meeting on 1st of March
• Total pay for CEO Jesse Singh includes US$825.0k salary
• Total compensation is similar to the industry average
• AZEK's total shareholder return over the past three years was 6.3% while its EPS grew by 57% over the past three years

CEO Jesse Singh has done a decent job of delivering relatively good performance at The AZEK Company Inc. (NYSE:AZEK) recently. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 1st of March. Based on our analysis of the data below, we think CEO compensation seems reasonable for now.

View our latest analysis for AZEK

How Does Total Compensation For Jesse Singh Compare With Other Companies In The Industry?

Our data indicates that The AZEK Company Inc. has a market capitalization of US$6.8b, and total annual CEO compensation was reported as US$5.3m for the year to September 2023. Notably, that's an increase of 20% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at US$825k.

In comparison with other companies in the American Building industry with market capitalizations ranging from US$4.0b to US$12b, the reported median CEO total compensation was US$5.8m. This suggests that AZEK remunerates its CEO largely in line with the industry average. Moreover, Jesse Singh also holds US$81m worth of AZEK stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	US$825k	US$816k	16%
Other	US$4.5m	US$3.6m	84%
Total Compensation	US$5.3m	US$4.4m	100%

On an industry level, around 17% of total compensation represents salary and 83% is other remuneration. Although there is a difference in how total compensation is set, AZEK more or less reflects the market in terms of setting the salary. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

The AZEK Company Inc.'s Growth

The AZEK Company Inc. has seen its earnings per share (EPS) increase by 57% a year over the past three years. In the last year, its revenue is up 6.3%.

Shareholders would be glad to know that the company has improved itself over the last few years. It's also good to see modest revenue growth, suggesting the underlying business is healthy. 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 The AZEK Company Inc. Been A Good Investment?

With a total shareholder return of 6.3% over three years, The AZEK Company Inc. has done okay by shareholders, but there's always room for improvement. In light of that, investors might probably want to see an improvement on their returns before they feel generous about increasing the CEO remuneration.

To Conclude...

Given that the company's overall performance has been reasonable, the CEO remuneration policy might not be shareholders' central point of focus in the upcoming AGM. Despite the pleasing results, we still think that any proposed increases to CEO compensation will be examined based on a case by case basis and linked to performance outcomes.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 2 warning signs for AZEK that investors should look into moving forward.

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.

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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.