This article will reflect on the compensation paid to Daniel Jones who has served as CEO of Encore Wire Corporation (NASDAQ:WIRE) since 2006. This analysis will also assess whether Encore Wire pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
How Does Total Compensation For Daniel Jones Compare With Other Companies In The Industry?
Our data indicates that Encore Wire Corporation has a market capitalization of US$971m, and total annual CEO compensation was reported as US$2.9m for the year to December 2019. Notably, that's an increase of 9.2% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$925k.
On comparing similar companies from the same industry with market caps ranging from US$400m to US$1.6b, we found that the median CEO total compensation was US$2.9m. From this we gather that Daniel Jones is paid around the median for CEOs in the industry. Furthermore, Daniel Jones directly owns US$19m worth of shares in the company, implying that they are deeply invested in the company's success.
On an industry level, roughly 29% of total compensation represents salary and 71% is other remuneration. Although there is a difference in how total compensation is set, Encore Wire more or less reflects the market in terms of setting the salary. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
Encore Wire Corporation's Growth
Encore Wire Corporation's earnings per share (EPS) grew 11% per year over the last three years. Its revenue is down 10% over the previous year.
Shareholders would be glad to know that the company has improved itself over the last few years. While it would be good to see revenue growth, profits matter more in the end. 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 Encore Wire Corporation Been A Good Investment?
Encore Wire Corporation has not done too badly by shareholders, with a total return of 6.5%, over three years. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.
As previously discussed, Daniel is compensated close to the median for companies of its size, and which belong to the same industry. But EPS growth for the company has been strong over the last three years, though shareholder returns in comparison haven't been as impressive. Considering overall performance, we'd say the compensation is fair, although stockholders will want to see higher returns moving forward.
If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Encore Wire.
Important note: Encore Wire is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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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