Daniel Jones has been the CEO of Encore Wire Corporation (NASDAQ:WIRE) since 2006, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether Encore Wire pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Check out our latest analysis for Encore Wire
Comparing Encore Wire Corporation's CEO Compensation With the industry
According to our data, Encore Wire Corporation has a market capitalization of US$1.1b, and paid its CEO total annual compensation worth US$2.9m over 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.
In comparison with other companies in the industry with market capitalizations ranging from US$400m to US$1.6b, the reported median CEO total compensation was US$2.5m. From this we gather that Daniel Jones is paid around the median for CEOs in the industry. What's more, Daniel Jones holds US$22m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
| Component | 2019 | 2018 | Proportion (2019) |
| Salary | US$925k | US$850k | 32% |
| Other | US$2.0m | US$1.8m | 68% |
| Total Compensation | US$2.9m | US$2.6m | 100% |
Speaking on an industry level, nearly 31% of total compensation represents salary, while the remainder of 69% is other remuneration. Encore Wire is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
A Look at Encore Wire Corporation's Growth Numbers
Encore Wire Corporation has seen its earnings per share (EPS) increase by 7.9% a year over the past three years. It saw its revenue drop 7.3% over the last year.
We would argue that the lack of revenue growth in the last year is less than ideal, but the modest EPSgrowth gives us some relief. It's hard to reach a conclusion about business performance right now. This may be one to watch. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Encore Wire Corporation Been A Good Investment?
With a total shareholder return of 15% over three years, Encore Wire Corporation shareholders would, in general, be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
To Conclude...
As we touched on above, Encore Wire Corporation 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. But the company has failed to produce substantial growth in either EPS or total shareholder return. So, although the CEO compensation seems reasonable, shareholders might want to see some further progress before they agree that Daniel should get a raise.
If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Encore Wire.
Switching gears from Encore Wire, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
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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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