In 2017 Robert Graham was appointed CEO of Valhi, Inc. (NYSE:VHI). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we'll consider growth that the business demonstrates. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Robert Graham's Compensation Compare With Similar Sized Companies?
According to our data, Valhi, Inc. has a market capitalization of US$568m, and paid its CEO total annual compensation worth US$5.8m over the year to December 2018. It is worth noting that the CEO compensation consists almost entirely of the salary, worth US$5.8m. When we examined a selection of companies with market caps ranging from US$200m to US$800m, we found the median CEO total compensation was US$1.7m.
As you can see, Robert Graham is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Valhi, Inc. is paying too much. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
You can see, below, how CEO compensation at Valhi has changed over time.
Is Valhi, Inc. Growing?
Over the last three years Valhi, Inc. has grown its earnings per share (EPS) by an average of 31% per year (using a line of best fit). It saw its revenue drop 2.9% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. Revenue growth is a real positive for growth, but ultimately profits are more important. We don't have analyst forecasts, but you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Valhi, Inc. Been A Good Investment?
Since shareholders would have lost about 37% over three years, some Valhi, Inc. shareholders would surely be feeling negative emotions. So shareholders would probably think the company shouldn't be too generous with CEO compensation.
We compared total CEO remuneration at Valhi, Inc. with the amount paid at companies with a similar market capitalization. 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. However, the returns to investors are far less impressive, over the same period. One might thus conclude that it would be better if the company waited until growth is reflected in the share price, before increasing CEO compensation. So you may want to check if insiders are buying Valhi shares with their own money (free access).
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.
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. Thank you for reading.
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