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Shareholders will probably not be disappointed by the robust results at Argan, Inc. (NYSE:AGX) recently and they will be keeping this in mind as they go into the AGM on 24 June 2021. They will probably be more interested in hearing the board discuss future initiatives to further improve the business as they vote on resolutions such as executive remuneration. In our analysis below, we discuss why we think the CEO compensation looks acceptable and the case for a raise.
Comparing Argan, Inc.'s CEO Compensation With the industry
According to our data, Argan, Inc. has a market capitalization of US$725m, and paid its CEO total annual compensation worth US$1.0m over the year to January 2021. That's a notable decrease of 23% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$225k.
For comparison, other companies in the same industry with market capitalizations ranging between US$400m and US$1.6b had a median total CEO compensation of US$3.3m. That is to say, Rainer Bosselmann is paid under the industry median. Moreover, Rainer Bosselmann also holds US$16m worth of Argan 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. Argan is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
Argan, Inc.'s Growth
Over the last three years, Argan, Inc. has shrunk its earnings per share by 15% per year. It achieved revenue growth of 84% over the last year.
The decrease in EPS could be a concern for some investors. But on the other hand, revenue growth is strong, suggesting a brighter future. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has Argan, Inc. Been A Good Investment?
We think that the total shareholder return of 44%, over three years, would leave most Argan, Inc. shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
Overall, the company hasn't done too poorly performance-wise, but we would like to see some improvement. If it manages to keep up the current streak, CEO remuneration could well be one of shareholders' least concerns. 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.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We've identified 2 warning signs for Argan that investors should be aware of in a dynamic business environment.
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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