How Should Investors Feel About CSW Industrials' (NASDAQ:CSWI) CEO Remuneration?

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This article will reflect on the compensation paid to Joe Armes who has served as CEO of CSW Industrials, Inc. (NASDAQ:CSWI) since 2015. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for CSW Industrials.

View our latest analysis for CSW Industrials

Comparing CSW Industrials, Inc.’s CEO Compensation With the industry

At the time of writing, our data shows that CSW Industrials, Inc. has a market capitalization of US$1.3b, and reported total annual CEO compensation of US$3.8m for the year to March 2020. That’s a modest increase of 6.5% on the prior year. While this analysis focuses on total compensation, it’s worth acknowledging that the salary portion is lower, valued at US$581k.

On examining similar-sized companies in the industry with market capitalizations between US$1.0b and US$3.2b, we discovered that the median CEO total compensation of that group was US$3.2m. This suggests that CSW Industrials remunerates its CEO largely in line with the industry average. Moreover, Joe Armes also holds US$5.6m worth of CSW Industrials stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component 2020 2019 Proportion (2020)
Salary US$581k US$540k 15%
Other US$3.2m US$3.0m 85%
Total Compensation US$3.8m US$3.6m 100%

On an industry level, around 19% of total compensation represents salary and 81% is other remuneration. It’s interesting to note that CSW Industrials allocates a smaller portion of compensation to salary 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.

ceo-compensation

A Look at CSW Industrials, Inc.’s Growth Numbers

CSW Industrials, Inc. has seen its earnings per share (EPS) increase by 22% a year over the past three years. Its revenue is up 3.2% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. It’s good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. 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 CSW Industrials, Inc. Been A Good Investment?

Boasting a total shareholder return of 82% over three years, CSW Industrials, Inc. has done well by shareholders. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary…

As we touched on above, CSW Industrials, Inc. is currently paying a compensation that’s close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Investors would surely be happy to see that returns have been great, and that EPS is up. Although the pay is close to the industry median, overall performance is excellent, so we don’t think the CEO is paid too generously. In fact, shareholders might even think the CEO deserves a raise as a reward due to the fantastic returns generated.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That’s why we did some digging and identified 1 warning sign for CSW Industrials that you should be aware of before investing.

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.

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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