It's Unlikely That Hovnanian Enterprises, Inc.'s (NYSE:HOV) CEO Will See A Huge Pay Rise This Year

Key Insights

• Hovnanian Enterprises to hold its Annual General Meeting on 28th of March
• Salary of US$1.15m is part of CEO Ara Hovnanian's total remuneration
• The overall pay is 223% above the industry average
• Hovnanian Enterprises' EPS grew by 41% over the past three years while total shareholder return over the past three years was 476%

Performance at Hovnanian Enterprises, Inc. (NYSE:HOV) has been reasonably good and CEO Ara Hovnanian has done a decent job of steering the company in the right direction. As shareholders go into the upcoming AGM on 28th of March, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. However, some shareholders will still be cautious of paying the CEO excessively.

See our latest analysis for Hovnanian Enterprises

How Does Total Compensation For Ara Hovnanian Compare With Other Companies In The Industry?

At the time of writing, our data shows that Hovnanian Enterprises, Inc. has a market capitalization of US$377m, and reported total annual CEO compensation of US$17m for the year to October 2022. We note that's an increase of 32% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.2m.

For comparison, other companies in the American Consumer Durables industry with market capitalizations ranging between US$200m and US$800m had a median total CEO compensation of US$5.1m. This suggests that Ara Hovnanian is paid more than the median for the industry. Furthermore, Ara Hovnanian directly owns US$74m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2022	2021	Proportion (2022)
Salary	US$1.2m	US$1.3m	7%
Other	US$15m	US$11m	93%
Total Compensation	US$17m	US$12m	100%

On an industry level, around 17% of total compensation represents salary and 83% is other remuneration. In Hovnanian Enterprises' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Hovnanian Enterprises, Inc.'s Growth

Hovnanian Enterprises, Inc. has seen its earnings per share (EPS) increase by 41% a year over the past three years. Its revenue is up 3.6% 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. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Hovnanian Enterprises, Inc. Been A Good Investment?

Boasting a total shareholder return of 476% over three years, Hovnanian Enterprises, Inc. has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

Seeing that the company has put up a decent performance, only a few shareholders, if any at all, might have questions about the CEO pay in the upcoming AGM. However, if the board proposes to increase the compensation, some shareholders might have questions given that the CEO is already being paid higher than the industry.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 3 warning signs (and 1 which makes us a bit uncomfortable) in Hovnanian Enterprises we think you should know about.

Switching gears from Hovnanian Enterprises, 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.

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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.