Here's Why Shareholders May Want To Be Cautious With Increasing ABM Industries Incorporated's (NYSE:ABM) CEO Pay Packet

Key Insights

• ABM Industries' Annual General Meeting to take place on 27th of March
• Total pay for CEO Scott Salmirs includes US$1.00m salary
• The overall pay is 45% above the industry average
• Over the past three years, ABM Industries' EPS grew by 80% and over the past three years, the total loss to shareholders 7.3%

As many shareholders of ABM Industries Incorporated (NYSE:ABM) will be aware, they have not made a gain on their investment in the past three years. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. These are some of the concerns that shareholders may want to bring up at the next AGM held on 27th of March. They could also influence management through voting on resolutions such as executive remuneration. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

See our latest analysis for ABM Industries

How Does Total Compensation For Scott Salmirs Compare With Other Companies In The Industry?

At the time of writing, our data shows that ABM Industries Incorporated has a market capitalization of US$2.7b, and reported total annual CEO compensation of US$8.3m for the year to October 2023. That is, the compensation was roughly the same as last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.0m.

On comparing similar companies from the American Commercial Services industry with market caps ranging from US$2.0b to US$6.4b, we found that the median CEO total compensation was US$5.7m. Hence, we can conclude that Scott Salmirs is remunerated higher than the industry median. Moreover, Scott Salmirs also holds US$18m worth of ABM Industries stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	US$1.0m	US$1.0m	12%
Other	US$7.3m	US$7.3m	88%
Total Compensation	US$8.3m	US$8.3m	100%

On an industry level, around 24% of total compensation represents salary and 76% is other remuneration. ABM Industries sets aside a smaller share of compensation for salary, in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

ABM Industries Incorporated's Growth

ABM Industries Incorporated has seen its earnings per share (EPS) increase by 80% a year over the past three years. Its revenue is up 4.0% over the last year.

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 ABM Industries Incorporated Been A Good Investment?

Since shareholders would have lost about 7.3% over three years, some ABM Industries Incorporated investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. Shareholders would be keen to know what's holding the stock back when earnings have grown. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We did our research and identified 3 warning signs (and 1 which makes us a bit uncomfortable) in ABM Industries we think you should know about.

Important note: ABM 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.