Is D.R. Horton, Inc.’s (NYSE:DHI) CEO Paid Enough Relative To Peers?

David Auld has been the CEO of D.R. Horton, Inc. (NYSE:DHI) since 2014. First, this article will compare CEO compensation with compensation at other large companies. Next, we’ll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.

See our latest analysis for D.R. Horton

How Does David Auld’s Compensation Compare With Similar Sized Companies?

According to our data, D.R. Horton, Inc. has a market capitalization of US$17b, and pays its CEO total annual compensation worth US$15m. (This figure is for the year to September 2018). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$700k. We looked at a group of companies with market capitalizations over US$8.0b and the median CEO total compensation was US$11m. There aren’t very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.

It would therefore appear that D.R. Horton, Inc. pays David Auld more than the median CEO remuneration at large companies, in the same market. However, this fact alone doesn’t mean the remuneration is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.

You can see a visual representation of the CEO compensation at D.R. Horton, below.

NYSE:DHI CEO Compensation, April 24th 2019
NYSE:DHI CEO Compensation, April 24th 2019

Is D.R. Horton, Inc. Growing?

On average over the last three years, D.R. Horton, Inc. has grown earnings per share (EPS) by 22% each year (using a line of best fit). Its revenue is up 12% over last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It’s also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. Shareholders might be interested in this free visualization of analyst forecasts.

Has D.R. Horton, Inc. Been A Good Investment?

Boasting a total shareholder return of 53% over three years, D.R. Horton, Inc. has done well by shareholders. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary…

We compared the total CEO remuneration paid by D.R. Horton, Inc., and compared it to remuneration at a group of other large companies. Our data suggests that it pays above the median CEO pay within that group.

However, the earnings per share growth over three years is certainly impressive. Even better, returns to shareholders have been plentiful, over the same time period. So, considering this good performance, the CEO compensation may be quite appropriate. Shareholders may want to check for free if D.R. Horton insiders are buying or selling shares.

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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.