How Is Home Depot’s (NYSE:HD) CEO Paid Relative To Peers?

This article will reflect on the compensation paid to Craig Menear who has served as CEO of The Home Depot, Inc. (NYSE:HD) since 2014. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

View our latest analysis for Home Depot

Comparing The Home Depot, Inc.’s CEO Compensation With the industry

At the time of writing, our data shows that The Home Depot, Inc. has a market capitalization of US$296b, and reported total annual CEO compensation of US$11m for the year to February 2020. That’s a slight decrease of 4.2% on the prior year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.3m.

In comparison with other companies in the industry with market capitalizations over US$8.0b , the reported median total CEO compensation was US$11m. From this we gather that Craig Menear is paid around the median for CEOs in the industry. Furthermore, Craig Menear directly owns US$50m worth of shares in the company, implying that they are deeply invested in the company’s success.

Component 2020 2019 Proportion (2020)
Salary US$1.3m US$1.3m 12%
Other US$9.6m US$10m 88%
Total Compensation US$11m US$11m 100%

On an industry level, roughly 20% of total compensation represents salary and 80% is other remuneration. Home Depot sets aside a smaller share of compensation for salary, in comparison to the overall industry. It’s important to note that a slant towards non-salary compensation suggests that total pay is tied to the company’s performance.

The Home Depot, Inc.’s Growth

Over the past three years, The Home Depot, Inc. has seen its earnings per share (EPS) grow by 16% per year. In the last year, its revenue is up 8.5%.

Shareholders would be glad to know that the company has improved itself over the last few years. It’s good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. Looking ahead, you might want to check this free visual report on analyst forecasts for the company’s future earnings..

Has The Home Depot, Inc. Been A Good Investment?

Most shareholders would probably be pleased with The Home Depot, Inc. for providing a total return of 84% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary…

As we noted earlier, Home Depot pays its CEO in line with similar-sized companies belonging to the same industry. Investors would surely be happy to see that returns have been great, and that EPS is up. Although the pay is close to the industry median, overall performance is excellent, so we don’t think the CEO is paid too generously. In fact, shareholders might even think the CEO deserves a raise as a reward due to the fantastic returns generated.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That’s why we did some digging and identified 2 warning signs for Home Depot that you should be aware of before investing.

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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