Stock Analysis

We Take A Look At Why ABM Industries Incorporated's (NYSE:ABM) CEO Compensation Is Well Earned

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NYSE:ABM
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Key Insights

  • ABM Industries to hold its Annual General Meeting on 22nd of March
  • CEO Scott Salmirs' total compensation includes salary of US$1.00m
  • The total compensation is similar to the average for the industry
  • ABM Industries' total shareholder return over the past three years was 95% while its EPS grew by 11% over the past three years

It would be hard to discount the role that CEO Scott Salmirs has played in delivering the impressive results at ABM Industries Incorporated (NYSE:ABM) recently. The pleasing results would be something shareholders would keep in mind at the upcoming AGM on 22nd of March. This would also be a chance for them to hear the board review the financial results, discuss future company strategy and vote on any resolutions such as executive remuneration. In light of the great performance, we discuss the case why we think CEO compensation is not excessive.

Check out our latest analysis for ABM Industries

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

According to our data, ABM Industries Incorporated has a market capitalization of US$2.9b, and paid its CEO total annual compensation worth US$8.3m over the year to October 2022. We note that's an increase of 10% above last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.0m.

For comparison, other companies in the American Commercial Services industry with market capitalizations ranging between US$2.0b and US$6.4b had a median total CEO compensation of US$6.7m. From this we gather that Scott Salmirs is paid around the median for CEOs in the industry. Furthermore, Scott Salmirs directly owns US$17m worth of shares in the company, implying that they are deeply invested in the company's success.

Component20222021Proportion (2022)
Salary US$1.0m US$990k 12%
Other US$7.3m US$6.6m 88%
Total CompensationUS$8.3m US$7.6m100%

Talking in terms of the industry, salary represented approximately 18% of total compensation out of all the companies we analyzed, while other remuneration made up 82% of the pie. ABM Industries sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

ceo-compensation
NYSE:ABM CEO Compensation March 16th 2023

A Look at ABM Industries Incorporated's Growth Numbers

Over the past three years, ABM Industries Incorporated has seen its earnings per share (EPS) grow by 11% per year. In the last year, its revenue is up 18%.

This demonstrates that the company has been improving recently and is good news for the shareholders. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. 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?

We think that the total shareholder return of 95%, over three years, would leave most ABM Industries Incorporated shareholders smiling. 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...

Given the company's decent performance, the CEO remuneration policy might not be shareholders' central point of focus in the AGM. In fact, strategic decisions that could impact the future of the business might be a far more interesting topic for investors as it would help them set their longer-term expectations.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 2 warning signs (and 1 which makes us a bit uncomfortable) in ABM Industries we think you should know about.

Switching gears from ABM Industries, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

Valuation is complex, but we're helping make it simple.

Find out whether ABM Industries is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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