This article will reflect on the compensation paid to Jeff Edwards who has served as CEO of Installed Building Products, Inc. (NYSE:IBP) since 2004. 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 Jeff Edwards Compare With Other Companies In The Industry?
At the time of writing, our data shows that Installed Building Products, Inc. has a market capitalization of US$3.2b, and reported total annual CEO compensation of US$3.4m for the year to December 2019. We note that's an increase of 11% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$674k.
On comparing similar companies from the same industry with market caps ranging from US$2.0b to US$6.4b, we found that the median CEO total compensation was US$9.2m. This suggests that Jeff Edwards is paid below the industry median. Furthermore, Jeff Edwards directly owns US$670m worth of shares in the company, implying that they are deeply invested in the company's success.
On an industry level, around 25% of total compensation represents salary and 75% is other remuneration. Installed Building Products pays a modest slice of remuneration through salary, as compared to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
Installed Building Products, Inc.'s Growth
Installed Building Products, Inc. has seen its earnings per share (EPS) increase by 28% a year over the past three years. It achieved revenue growth of 12% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Installed Building Products, Inc. Been A Good Investment?
We think that the total shareholder return of 67%, over three years, would leave most Installed Building Products, Inc. shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
As previously discussed, Jeff is compensated less than what is normal for CEOs of companies of similar size, and which belong to the same industry. When taking into account the company's strong EPS growth over the past three years, it appears CEO compensation is modest. And given most shareholders are probably very happy with recent shareholder returns, they might even think Jeff deserves a raise!
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 3 warning signs for Installed Building Products that investors should think about before committing capital to this stock.
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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