Joe Raver became the CEO of Hillenbrand, Inc. (NYSE:HI) in 2013. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we’ll consider growth that the business demonstrates. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.
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How Does Joe Raver’s Compensation Compare With Similar Sized Companies?
Our data indicates that Hillenbrand, Inc. is worth US$2.3b, and total annual CEO compensation is US$5.3m. (This figure is for the year to September 2018). While we always look at total compensation first, we note that the salary component is less, at US$810k. When we examined a selection of companies with market caps ranging from US$1.0b to US$3.2b, we found the median CEO total compensation was US$4.1m.
Thus we can conclude that Joe Raver receives more in total compensation than the median of a group of companies in the same market, and of similar size to Hillenbrand, Inc.. However, this doesn’t necessarily mean the pay is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
The graphic below shows how CEO compensation at Hillenbrand has changed from year to year.
Is Hillenbrand, Inc. Growing?
On average over the last three years, Hillenbrand, Inc. has shrunk earnings per share by 2.6% each year (measured with a line of best fit). It achieved revenue growth of 6.4% over the last year.
Unfortunately there is a complete lack of earnings per share improvement, over three years. And the modest revenue growth over 12 months isn’t much comfort against the reduced earnings per share. These factors suggest that the business performance wouldn’t really justify a high pay packet for the CEO. Shareholders might be interested in this free visualization of analyst forecasts.
Has Hillenbrand, Inc. Been A Good Investment?
With a total shareholder return of 28% over three years, Hillenbrand, Inc. shareholders would, in general, be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.
We compared the total CEO remuneration paid by Hillenbrand, Inc., and compared it to remuneration at a group of similar sized companies. We found that it pays well over the median amount paid in the benchmark group.Earnings per share have not grown in three years, and the revenue growth fails to impress us.
And while shareholder returns have been respectable, they have hardly been superb. So you may want to delve deeper, because we don’t think the CEO pay is too low. Shareholders may want to check for free if Hillenbrand insiders are buying or selling shares.
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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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.