Does Thermon Group Holdings' (NYSE:THR) CEO Salary Compare Well With Industry Peers?

Bruce Thames became the CEO of Thermon Group Holdings, Inc. (NYSE:THR) in 2016, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

See our latest analysis for Thermon Group Holdings

Comparing Thermon Group Holdings, Inc.'s CEO Compensation With the industry

According to our data, Thermon Group Holdings, Inc. has a market capitalization of US$559m, and paid its CEO total annual compensation worth US$2.2m over the year to March 2020. Notably, that's a decrease of 30% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at US$643k.

For comparison, other companies in the same industry with market capitalizations ranging between US$200m and US$800m had a median total CEO compensation of US$1.6m. Hence, we can conclude that Bruce Thames is remunerated higher than the industry median. Moreover, Bruce Thames also holds US$1.6m worth of Thermon Group Holdings stock directly under their own name.

On an industry level, around 30% of total compensation represents salary and 70% is other remuneration. Although there is a difference in how total compensation is set, Thermon Group Holdings more or less reflects the market in terms of setting the salary. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Thermon Group Holdings, Inc.'s Growth Numbers

Over the last three years, Thermon Group Holdings, Inc. has shrunk its earnings per share by 10% per year. In the last year, its revenue is down 27%.

Few shareholders would be pleased to read that EPS have declined. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 Thermon Group Holdings, Inc. Been A Good Investment?

Since shareholders would have lost about 30% over three years, some Thermon Group Holdings, Inc. investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

As previously discussed, Bruce is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. Disappointingly, share price gains over the last three years have failed to materialize. To make matters worse, EPS growth has also been negative during this period. Overall, with such poor performance, shareholder's would probably have questions if the company decided to give the CEO a raise.

CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 2 warning signs for Thermon Group Holdings you should be aware of, and 1 of them can't be ignored.

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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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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