We Discuss Why Miller Industries, Inc.'s (NYSE:MLR) CEO May Deserve A Higher Pay Packet

The decent performance at Miller Industries, Inc. (NYSE:MLR) recently will please most shareholders as they go into the AGM coming up on 28 May 2021. They will probably be more interested in hearing the board discuss future initiatives to further improve the business as they vote on resolutions such as executive remuneration. In our analysis below, we discuss why we think the CEO compensation looks acceptable and the case for a raise.

View our latest analysis for Miller Industries

Comparing Miller Industries, Inc.'s CEO Compensation With the industry

At the time of writing, our data shows that Miller Industries, Inc. has a market capitalization of US$474m, and reported total annual CEO compensation of US$760k for the year to December 2020. Notably, that's a decrease of 18% over the year before. In particular, the salary of US$504.0k, makes up a huge portion of the total compensation being paid to the CEO.

On examining similar-sized companies in the industry with market capitalizations between US$200m and US$800m, we discovered that the median CEO total compensation of that group was US$2.3m. In other words, Miller Industries pays its CEO lower than the industry median.

Component	2020	2019	Proportion (2020)
Salary	US$504k	US$489k	66%
Other	US$256k	US$441k	34%
Total Compensation	US$760k	US$930k	100%

Talking in terms of the industry, salary represented approximately 19% of total compensation out of all the companies we analyzed, while other remuneration made up 81% of the pie. It's interesting to note that Miller Industries pays out a greater portion of remuneration through salary, compared to the industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Miller Industries, Inc.'s Growth

Over the past three years, Miller Industries, Inc. has seen its earnings per share (EPS) grow by 2.1% per year. In the last year, its revenue is down 19%.

We would prefer it if there was revenue growth, but it is good to see a modest EPS growth at least. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Miller Industries, Inc. Been A Good Investment?

Most shareholders would probably be pleased with Miller Industries, Inc. for providing a total return of 68% over three years. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

To Conclude...

While the company seems to be headed in the right direction performance-wise, there's always room for improvement. If it manages to keep up the current streak, CEO remuneration could well be one of shareholders' least concerns. Rather, investors would more likely want to engage on discussions related to key strategic initiatives and future growth opportunities for the company and set their longer-term expectations.

So you may want to check if insiders are buying Miller Industries shares with their own money (free access).

Important note: Miller Industries is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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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. 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.
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