It would be hard to discount the role that CEO Brian Lane has played in delivering the impressive results at Comfort Systems USA, Inc. (NYSE:FIX) recently. Shareholders will have this at the front of their minds in the upcoming AGM on 18 May 2021. It is likely that the focus will be on company strategy going forward as shareholders hear from the board and cast their votes on resolutions such as executive remuneration and other matters. In light of the great performance, we discuss the case why we think CEO compensation is not excessive.
Comparing Comfort Systems USA, Inc.'s CEO Compensation With the industry
According to our data, Comfort Systems USA, Inc. has a market capitalization of US$3.1b, and paid its CEO total annual compensation worth US$4.1m over the year to December 2020. We note that's an increase of 19% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$765k.
On examining similar-sized companies in the industry with market capitalizations between US$2.0b and US$6.4b, we discovered that the median CEO total compensation of that group was US$5.3m. This suggests that Comfort Systems USA remunerates its CEO largely in line with the industry average. Moreover, Brian Lane also holds US$20m worth of Comfort Systems USA stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Talking in terms of the industry, salary represented approximately 22% of total compensation out of all the companies we analyzed, while other remuneration made up 78% of the pie. In Comfort Systems USA's case, non-salary compensation represents a greater slice of total remuneration, in comparison 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.
A Look at Comfort Systems USA, Inc.'s Growth Numbers
Over the past three years, Comfort Systems USA, Inc. has seen its earnings per share (EPS) grow by 36% per year. In the last year, its revenue is up 1.8%.
This demonstrates that the company has been improving recently and is good news for the shareholders. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. 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 Comfort Systems USA, Inc. Been A Good Investment?
We think that the total shareholder return of 97%, over three years, would leave most Comfort Systems USA, Inc. shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
Seeing that the company has put in a relatively good performance, the CEO remuneration policy may not be the focus at the AGM. Instead, investors might be more interested in discussions that would help manage their longer-term growth expectations such as company business strategies and future growth potential.
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 Comfort Systems USA (1 is a bit unpleasant!) that you should be aware of before investing here.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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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