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Key Things To Understand About Armstrong World Industries' (NYSE:AWI) CEO Pay Cheque

This article will reflect on the compensation paid to Vic Grizzle who has served as CEO of Armstrong World Industries, Inc. (NYSE:AWI) since 2016. This analysis will also assess whether Armstrong World Industries pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

Check out our latest analysis for Armstrong World Industries

Comparing Armstrong World Industries, Inc.'s CEO Compensation With the industry

Our data indicates that Armstrong World Industries, Inc. has a market capitalization of US$3.2b, and total annual CEO compensation was reported as US$5.1m for the year to December 2019. We note that's an increase of 8.0% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$788k.

For comparison, other companies in the same industry with market capitalizations ranging between US$2.0b and US$6.4b had a median total CEO compensation of US$4.9m. This suggests that Armstrong World Industries remunerates its CEO largely in line with the industry average. Moreover, Vic Grizzle also holds US$18m worth of Armstrong World Industries stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component

2019

2018

Proportion (2019)

Salary

US$788k

US$744k

15%

Other

US$4.3m

US$4.0m

85%

Total Compensation

US$5.1m

US$4.7m

100%

On an industry level, around 19% of total compensation represents salary and 81% is other remuneration. It's interesting to note that Armstrong World Industries allocates a smaller portion of compensation to salary in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

ceo-compensation
ceo-compensation

A Look at Armstrong World Industries, Inc.'s Growth Numbers

Armstrong World Industries, Inc. has reduced its earnings per share by 22% a year over the last three years. It saw its revenue drop 3.7% over the last year.

Few shareholders would be pleased to read that EPS have declined. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 Armstrong World Industries, Inc. Been A Good Investment?

Boasting a total shareholder return of 42% over three years, Armstrong World Industries, Inc. has done well by shareholders. 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, Armstrong World Industries pays its CEO in line with similar-sized companies belonging to the same industry. Some investors may take issue with this, especially considering shrinking EPS for the past three years. But on the bright side, shareholder returns have moved northward during the same period. We wouldn't say CEO compensation is too high, but shrinking EPS is undoubtedly an issue that will have to be addressed.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. In our study, we found 2 warning signs for Armstrong World Industries you should be aware of, and 1 of them is significant.

Switching gears from Armstrong World Industries, 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.

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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