Here's Why Shareholders May Want To Be Cautious With Increasing Griffon Corporation's (NYSE:GFF) CEO Pay Packet

Key Insights

• Griffon will host its Annual General Meeting on 20th of March
• Salary of US$1.21m is part of CEO Ron Kramer's total remuneration
• Total compensation is 159% above industry average
• Over the past three years, Griffon's EPS grew by 4.1% and over the past three years, the total shareholder return was 197%

Under the guidance of CEO Ron Kramer, Griffon Corporation (NYSE:GFF) has performed reasonably well recently. As shareholders go into the upcoming AGM on 20th of March, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. However, some shareholders will still be cautious of paying the CEO excessively.

View our latest analysis for Griffon

How Does Total Compensation For Ron Kramer Compare With Other Companies In The Industry?

According to our data, Griffon Corporation has a market capitalization of US$3.4b, and paid its CEO total annual compensation worth US$13m over the year to September 2023. We note that's a decrease of 8.3% compared to last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.2m.

In comparison with other companies in the American Building industry with market capitalizations ranging from US$2.0b to US$6.4b, the reported median CEO total compensation was US$5.1m. This suggests that Ron Kramer is paid more than the median for the industry. Furthermore, Ron Kramer directly owns US$183m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	US$1.2m	US$1.2m	9%
Other	US$12m	US$13m	91%
Total Compensation	US$13m	US$14m	100%

Speaking on an industry level, nearly 17% of total compensation represents salary, while the remainder of 83% is other remuneration. It's interesting to note that Griffon allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

Griffon Corporation's Growth

Griffon Corporation has seen its earnings per share (EPS) increase by 4.1% a year over the past three years. Its revenue is down 7.8% over the previous year.

We would argue that the lack of revenue growth in the last year is less than ideal, but it is good to see a modest EPS growth at least. It's hard to reach a conclusion about business performance right now. This may be one to watch. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Griffon Corporation Been A Good Investment?

We think that the total shareholder return of 197%, over three years, would leave most Griffon Corporation shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

Seeing that the company has put up a decent performance, only a few shareholders, if any at all, might have questions about the CEO pay in the upcoming AGM. Still, not all shareholders might be in favor of a pay raise to the CEO, seeing that they are already being paid higher than the industry.

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 Griffon that you should be aware of before investing.

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.