John Groetelaars has been the CEO of Hill-Rom Holdings, Inc. (NYSE:HRC) since 2018, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
How Does Total Compensation For John Groetelaars Compare With Other Companies In The Industry?
Our data indicates that Hill-Rom Holdings, Inc. has a market capitalization of US$7.1b, and total annual CEO compensation was reported as US$7.6m for the year to September 2020. That's a fairly small increase of 4.1% over the previous year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.0m.
On examining similar-sized companies in the industry with market capitalizations between US$4.0b and US$12b, we discovered that the median CEO total compensation of that group was US$5.7m. Hence, we can conclude that John Groetelaars is remunerated higher than the industry median. Furthermore, John Groetelaars directly owns US$1.8m worth of shares in the company.
On an industry level, roughly 23% of total compensation represents salary and 77% is other remuneration. Hill-Rom Holdings 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.
A Look at Hill-Rom Holdings, Inc.'s Growth Numbers
Over the past three years, Hill-Rom Holdings, Inc. has seen its earnings per share (EPS) grow by 6.4% per year. In the last year, its revenue changed by just 1.0%.
We'd prefer higher revenue growth, but it is good to see modest EPS growth. It's clear the performance has been quite decent, but it it falls short of outstanding,based on this information. 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 Hill-Rom Holdings, Inc. Been A Good Investment?
Hill-Rom Holdings, Inc. has served shareholders reasonably well, with a total return of 33% over three years. But they would probably prefer not to see CEO compensation far in excess of the median.
As we noted earlier, Hill-Rom Holdings pays its CEO higher than the norm for similar-sized companies belonging to the same industry. However, EPS growth is not moving in the right direction, and the returns to shareholders could have been better, over the last three years. Overall, although the company has delivered steady performance, we would like to see an improvement in key metrics before we can say the high CEO compensation is justified.
CEO compensation can have a massive impact on performance, but it's just one element. We've identified 1 warning sign for Hill-Rom Holdings that investors should be aware of in a dynamic business environment.
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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