Is Griffon Corporation (NYSE:GFF) Overpaying Its CEO?

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In 1970 Ron Kramer was appointed CEO of Griffon Corporation (NYSE:GFF). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we’ll look at a snap shot of the business growth. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.

Check out our latest analysis for Griffon

How Does Ron Kramer’s Compensation Compare With Similar Sized Companies?

According to our data, Griffon Corporation has a market capitalization of US$629m, and pays its CEO total annual compensation worth US$14m. (This is based on the year to September 2018). We think total compensation is more important but we note that the CEO salary is lower, at US$1.0m. When we examined a selection of companies with market caps ranging from US$400m to US$1.6b, we found the median CEO total compensation was US$2.7m.

As you can see, Ron Kramer is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Griffon Corporation is paying too much. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.

You can see, below, how CEO compensation at Griffon has changed over time.

NYSE:GFF CEO Compensation, May 31st 2019
NYSE:GFF CEO Compensation, May 31st 2019

Is Griffon Corporation Growing?

Griffon Corporation has increased its earnings per share (EPS) by an average of 2.1% a year, over the last three years (using a line of best fit). It achieved revenue growth of 24% over the last year.

This revenue growth could really point to a brighter future. And, while modest, the earnings per share growth is noticeable. So while we’d stop just short of calling this a top performer, but we think it is well worth watching. You might want to check this free visual report on analyst forecasts for future earnings.

Has Griffon Corporation Been A Good Investment?

With a three year total loss of 6.2%, Griffon Corporation would certainly have some dissatisfied shareholders. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.

In Summary…

We examined the amount Griffon Corporation pays its CEO, and compared it to the amount paid by similar sized companies. Our data suggests that it pays above the median CEO pay within that group.

The growth in the business has been uninspiring, but the shareholder returns have arguably been worse, over the last three years. Shareholders may wish to consider further research. Although we don’t think the CEO pay is too high, it is probably more on the generous side of things. Shareholders may want to check for free if Griffon insiders are buying or selling shares.

If you want to buy a stock that is better than Griffon, this free list of high return, low debt companies is a great place to look.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.