Is Griffon Corporation’s (NYSE:GFF) CEO Pay Justified?

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Ron Kramer became the CEO of Griffon Corporation (NYSE:GFF) in 2008. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.

View our latest analysis for Griffon

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

At the time of writing our data says that Griffon Corporation has a market cap of US$839m, and is paying total annual CEO compensation of US$14m. (This is based on the year to September 2018). That’s a notable increase of 17% on last year. While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$1.0m. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$400m to US$1.6b. The median total CEO compensation was US$2.2m.

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. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

The graphic below shows how CEO compensation at Griffon has changed from year to year.

NYSE:GFF CEO Compensation, February 24th 2019
NYSE:GFF CEO Compensation, February 24th 2019

Is Griffon Corporation Growing?

Over the last three years Griffon Corporation has shrunk its earnings per share by an average of 2.7% per year (measured with a line of best fit). It achieved revenue growth of 27% over the last year.

As investors, we are a bit wary of companies that have lower earnings per share, over three years. But on the other hand, revenue growth is strong, suggesting a brighter future. In conclusion we can’t form a strong opinion about business performance yet; but it’s one worth watching. It could be important to check this free visual depiction of what analysts expect for the future.

Has Griffon Corporation Been A Good Investment?

With a total shareholder return of 30% over three years, Griffon Corporation shareholders would, in general, be reasonably content. But they probably wouldn’t be so happy as to think the CEO should be paid more than is normal, for companies around this size.

In Summary…

We compared total CEO remuneration at Griffon Corporation with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of that group.

Over the last three years returns to investors have been uninspiring, and we would have liked to see stronger business growth. In conclusion we think the company should definitely focus on improving the business before awarding any large pay rises. Whatever your view on compensation, you might want to check if insiders are buying or selling Griffon shares (free trial).

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.

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.