Shareholders May Be Wary Of Increasing Generac Holdings Inc.'s (NYSE:GNRC) CEO Compensation Package

Key Insights

• Generac Holdings will host its Annual General Meeting on 13th of June
• Total pay for CEO Aaron Jagdfeld includes US$1.05m salary
• The overall pay is comparable to the industry average
• Generac Holdings' EPS declined by 20% over the past three years while total shareholder loss over the past three years was 59%

The results at Generac Holdings Inc. (NYSE:GNRC) have been quite disappointing recently and CEO Aaron Jagdfeld bears some responsibility for this. At the upcoming AGM on 13th of June, shareholders can hear from the board including their plans for turning around performance. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. The data we present below explains why we think CEO compensation is not consistent with recent performance.

View our latest analysis for Generac Holdings

How Does Total Compensation For Aaron Jagdfeld Compare With Other Companies In The Industry?

Our data indicates that Generac Holdings Inc. has a market capitalization of US$8.5b, and total annual CEO compensation was reported as US$7.1m for the year to December 2023. That's just a smallish increase of 4.1% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.1m.

On comparing similar companies from the American Electrical industry with market caps ranging from US$4.0b to US$12b, we found that the median CEO total compensation was US$7.9m. This suggests that Generac Holdings remunerates its CEO largely in line with the industry average. Moreover, Aaron Jagdfeld also holds US$82m worth of Generac Holdings 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$1.1m	US$1.0m	15%
Other	US$6.0m	US$5.8m	85%
Total Compensation	US$7.1m	US$6.8m	100%

On an industry level, around 22% of total compensation represents salary and 78% is other remuneration. Generac Holdings pays a modest slice of remuneration through salary, as compared to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at Generac Holdings Inc.'s Growth Numbers

Generac Holdings Inc. has reduced its earnings per share by 20% a year over the last three years. Its revenue is down 6.8% over the previous year.

Few shareholders would be pleased to read that EPS have declined. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Generac Holdings Inc. Been A Good Investment?

The return of -59% over three years would not have pleased Generac Holdings Inc. shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 1 warning sign for Generac Holdings that investors should be aware of in a dynamic business environment.

Switching gears from Generac Holdings, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.