Yahoo Finance Is Hovnanian Enterprises Inc’s (NYSE:HOV) CEO Overpaid Relative To Its Peers?
Ara Hovnanian became the CEO of Hovnanian Enterprises Inc (NYSE:HOV) in 1997. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.
Check out our latest analysis for Hovnanian Enterprises
How Does Ara Hovnanian’s Compensation Compare With Similar Sized Companies?
Our data indicates that Hovnanian Enterprises Inc is worth US$190m, and total annual CEO compensation is US$5.3m. (This number is for the twelve months until 2017). We think total compensation is more important but we note that the CEO salary is lower, at US$1.2m. When we examined a selection of companies with market caps ranging from US$100m to US$400m, we found the median CEO compensation was US$941k.
As you can see, Ara Hovnanian is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Hovnanian Enterprises Inc is paying too much. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
You can see, below, how CEO compensation at Hovnanian Enterprises has changed over time.
Is Hovnanian Enterprises Inc Growing?
Over the last three years Hovnanian Enterprises Inc has shrunk its earnings per share by an average of 107% per year. In the last year, its revenue is down -17%.
Few shareholders would be pleased to read that earnings per share are lower over three years. And the impression is worse when you consider revenue is down year-on-year. It’s hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration.
You might want to check this free visual report on analyst forecasts for future earnings.
Has Hovnanian Enterprises Inc Been A Good Investment?
Given the total loss of 36% over three years, many shareholders in Hovnanian Enterprises Inc are probably rather dissatisfied, to say the least. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.
In Summary…
We compared the total CEO remuneration paid by Hovnanian Enterprises Inc, and compared it to remuneration at a group of similar sized companies. Our data suggests that it pays above the median CEO pay within that group.
Neither earnings per share nor revenue have been growing sufficiently fast to impress us, over the last three years.
Arguably worse, investors are without a positive return for the last three years. This analysis suggests to us that the CEO is paid too generously! So you may want to check if insiders are buying Hovnanian Enterprises shares with their own money (free access).
Or you might prefer examine intently this intuitive graph showing past earnings and revenue.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
