John Butler has been the CEO of NACCO Industries, Inc. (NYSE:NC) since 2017, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for NACCO Industries.
How Does Total Compensation For John Butler Compare With Other Companies In The Industry?
At the time of writing, our data shows that NACCO Industries, Inc. has a market capitalization of US$148m, and reported total annual CEO compensation of US$3.7m for the year to December 2019. We note that's an increase of 11% above last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$709k.
For comparison, other companies in the industry with market capitalizations below US$200m, reported a median total CEO compensation of US$675k. Accordingly, our analysis reveals that NACCO Industries, Inc. pays John Butler north of the industry median. Furthermore, John Butler directly owns US$4.9m worth of shares in the company, implying that they are deeply invested in the company's success.
Talking in terms of the industry, salary represented approximately 16% of total compensation out of all the companies we analyzed, while other remuneration made up 84% of the pie. According to our research, NACCO Industries has allocated a higher percentage of pay to salary in comparison to the wider industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
NACCO Industries, Inc.'s Growth
NACCO Industries, Inc.'s earnings per share (EPS) grew 22% per year over the last three years. Its revenue is down 14% over the previous year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. 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 NACCO Industries, Inc. Been A Good Investment?
With a three year total loss of 49% for the shareholders, NACCO Industries, Inc. would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be lessto generous with CEO compensation.
As previously discussed, John is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. However, we must not forget that the EPS growth has been very strong, but shareholder returns — over the same period — have been disappointing. Although we'd stop short of calling it inappropriate, we think John is earning a very handsome sum.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 3 warning signs for NACCO Industries (1 is concerning!) that you should be aware of before investing here.
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.
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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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