This article will reflect on the compensation paid to Gene Lowe who has served as CEO of SPX Corporation (NYSE:SPXC) since 2015. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
View our latest analysis for SPX
How Does Total Compensation For Gene Lowe Compare With Other Companies In The Industry?
At the time of writing, our data shows that SPX Corporation has a market capitalization of US$2.5b, and reported total annual CEO compensation of US$7.6m for the year to December 2019. That's a notable increase of 44% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$878k.
On examining similar-sized companies in the industry with market capitalizations between US$2.0b and US$6.4b, we discovered that the median CEO total compensation of that group was US$5.9m. This suggests that SPX remunerates its CEO largely in line with the industry average. What's more, Gene Lowe holds US$13m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
| Component | 2019 | 2018 | Proportion (2019) |
| Salary | US$878k | US$846k | 12% |
| Other | US$6.7m | US$4.4m | 88% |
| Total Compensation | US$7.6m | US$5.3m | 100% |
Talking in terms of the industry, salary represented approximately 16% of total compensation out of all the companies we analyzed, while other remuneration made up 84% of the pie. In SPX's case, non-salary compensation represents a greater slice of total remuneration, in comparison 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.
SPX Corporation's Growth
Over the past three years, SPX Corporation has seen its earnings per share (EPS) grow by 70% per year. In the last year, its revenue is up 1.6%.
Shareholders would be glad to know that the company has improved itself over the last few years. It's nice to see revenue heading northwards, as this is consistent with healthy business conditions. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has SPX Corporation Been A Good Investment?
Most shareholders would probably be pleased with SPX Corporation for providing a total return of 79% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
To Conclude...
As we touched on above, SPX Corporation is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Investors would surely be happy to see that returns have been great, and that EPS is up. Indeed, many might consider that Gene is compensated rather modestly, given the solid company performance! In fact, shareholders might even think the CEO deserves a raise as a reward due to the fantastic returns generated.
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 2 warning signs for SPX that investors should be aware of in a dynamic business environment.
Important note: SPX 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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About NYSE:SPXC
SPX Technologies
Supplies infrastructure equipment serving the heating, ventilation, and cooling (HVAC); and detection and measurement markets worldwide.
Solid track record with adequate balance sheet.
