Mike Lamach became the CEO of Ingersoll-Rand Plc (NYSE:IR) in 2010. First, this article will compare CEO compensation with compensation at other large companies. 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. This process should give us an idea about how appropriately the CEO is paid.
How Does Mike Lamach's Compensation Compare With Similar Sized Companies?
According to our data, Ingersoll-Rand Plc has a market capitalization of US$30b, and paid its CEO total annual compensation worth US$16m over the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$1.4m. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. We looked at a group of companies with market capitalizations over US$8.0b and the median CEO total compensation was US$11m. Once you start looking at very large companies, you need to take a broader range, because there simply aren't that many of them.
It would therefore appear that Ingersoll-Rand Plc pays Mike Lamach more than the median CEO remuneration at large companies, in the same market. However, this fact alone doesn't mean the remuneration is too high. 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 Ingersoll-Rand has changed from year to year.
Is Ingersoll-Rand Plc Growing?
Ingersoll-Rand Plc has increased its earnings per share (EPS) by an average of 4.3% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 6.6%.
I'd prefer higher revenue growth, but it is good to see modest EPS growth. So there are some positives here, but not enough to earn high praise.
Has Ingersoll-Rand Plc Been A Good Investment?
I think that the total shareholder return of 108%, over three years, would leave most Ingersoll-Rand Plc shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
We compared the total CEO remuneration paid by Ingersoll-Rand Plc, and compared it to remuneration at a group of other large companies. We found that it pays well over the median amount paid in the benchmark group.
One might like to have seen stronger growth, but shareholder returns have been pleasing, over the last three years. So, considering these tasty returns, the CEO compensation may be quite appropriate. Shareholders may want to check for free if Ingersoll-Rand insiders are buying or selling shares.
If you want to buy a stock that is better than Ingersoll-Rand, this free list of high return, low debt companies is a great place to look.
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