Shareholders Will Probably Not Have Any Issues With Trex Company, Inc.'s (NYSE:TREX) CEO Compensation

Key Insights

• Trex Company will host its Annual General Meeting on 7th of May
• Salary of US$747.0k is part of CEO Bryan Fairbanks's total remuneration
• The total compensation is 43% less than the average for the industry
• Trex Company's three-year loss to shareholders was 18% while its EPS grew by 7.6% over the past three years

Performance at Trex Company, Inc. (NYSE:TREX) has been rather uninspiring recently and shareholders may be wondering how CEO Bryan Fairbanks plans to fix this. They will get a chance to exercise their voting power to influence the future direction of the company in the next AGM on 7th of May. It has been shown that setting appropriate executive remuneration incentivises the management to act in the interests of shareholders. We have prepared some analysis below to show that CEO compensation looks to be reasonable.

Check out our latest analysis for Trex Company

How Does Total Compensation For Bryan Fairbanks Compare With Other Companies In The Industry?

According to our data, Trex Company, Inc. has a market capitalization of US$9.6b, and paid its CEO total annual compensation worth US$5.8m over the year to December 2023. That's a notable increase of 77% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$747k.

On comparing similar companies in the American Building industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$10m. In other words, Trex Company pays its CEO lower than the industry median. Furthermore, Bryan Fairbanks directly owns US$3.7m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	US$747k	US$722k	13%
Other	US$5.0m	US$2.5m	87%
Total Compensation	US$5.8m	US$3.3m	100%

Talking in terms of the industry, salary represented approximately 15% of total compensation out of all the companies we analyzed, while other remuneration made up 85% of the pie. Trex Company pays a modest slice of remuneration through salary, as compared 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.

Trex Company, Inc.'s Growth

Trex Company, Inc. has seen its earnings per share (EPS) increase by 7.6% a year over the past three years. Its revenue is down 1.0% over the previous year.

We would prefer it if there was revenue growth, but the modest EPS growth gives us some relief. It's hard to reach a conclusion about business performance right now. This may be one to watch. 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 Trex Company, Inc. Been A Good Investment?

With a three year total loss of 18% for the shareholders, Trex Company, Inc. would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

The fact that shareholders have earned a negative share price return is certainly disconcerting. The disappointing performance may have something to do with the flat earnings growth. In the upcoming AGM, shareholders will get the opportunity to discuss these concerns with the board and assess if the board's plan is likely to improve company performance.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 1 warning sign for Trex Company that investors should think about before committing capital to this stock.

Important note: Trex Company 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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.