Most Shareholders Will Probably Find That The CEO Compensation For Toll Brothers, Inc. (NYSE:TOL) Is Reasonable

By
Simply Wall St
Published
March 02, 2021
NYSE:TOL
Source: Shutterstock

CEO Doug Yearley has done a decent job of delivering relatively good performance at Toll Brothers, Inc. (NYSE:TOL) recently. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 09 March 2021. Here is our take on why we think the CEO compensation looks appropriate.

View our latest analysis for Toll Brothers

Comparing Toll Brothers, Inc.'s CEO Compensation With the industry

According to our data, Toll Brothers, Inc. has a market capitalization of US$6.5b, and paid its CEO total annual compensation worth US$10m over the year to October 2020. That's a slight decrease of 6.7% on the prior year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.1m.

For comparison, other companies in the same industry with market capitalizations ranging between US$4.0b and US$12b had a median total CEO compensation of US$9.4m. From this we gather that Doug Yearley is paid around the median for CEOs in the industry. What's more, Doug Yearley holds US$15m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component20202019Proportion (2020)
Salary US$1.1m US$1.0m 11%
Other US$9.0m US$9.7m 89%
Total CompensationUS$10m US$11m100%

Talking in terms of the industry, salary represented approximately 29% of total compensation out of all the companies we analyzed, while other remuneration made up 71% of the pie. Toll Brothers 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:TOL CEO Compensation March 3rd 2021

A Look at Toll Brothers, Inc.'s Growth Numbers

Toll Brothers, Inc. saw earnings per share stay pretty flat over the last three years. In the last year, its revenue is up 1.7%.

We would argue that the improvement in revenue is good, but isn't particularly impressive, but we're happy with the modest EPS growth. So there are some positives here, but not enough to earn high praise. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Toll Brothers, Inc. Been A Good Investment?

Toll Brothers, Inc. has served shareholders reasonably well, with a total return of 24% over three years. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

In Summary...

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. In saying that, any proposed increase to CEO compensation will still be assessed on how reasonable it is based on performance and industry benchmarks.

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 2 warning signs for Toll Brothers that investors should think about before committing capital to this stock.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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. 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.
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