Eric Lipar became the CEO of LGI Homes, Inc. (NASDAQ:LGIH) in 2009, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for LGI Homes.
How Does Total Compensation For Eric Lipar Compare With Other Companies In The Industry?
Our data indicates that LGI Homes, Inc. has a market capitalization of US$3.0b, and total annual CEO compensation was reported as US$4.3m for the year to December 2019. This means that the compensation hasn't changed much from last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$825k.
On comparing similar companies from the same industry with market caps ranging from US$2.0b to US$6.4b, we found that the median CEO total compensation was US$8.8m. That is to say, Eric Lipar is paid under the industry median. What's more, Eric Lipar holds US$262m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
On an industry level, around 26% of total compensation represents salary and 74% is other remuneration. It's interesting to note that LGI Homes 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.
A Look at LGI Homes, Inc.'s Growth Numbers
LGI Homes, Inc.'s earnings per share (EPS) grew 29% per year over the last three years. In the last year, its revenue is up 30%.
This demonstrates that the company has been improving recently and is good news for the shareholders. The combination of strong revenue growth with medium-term earnings per share improvement certainly points to the kind of growth we like to see. 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 LGI Homes, Inc. Been A Good Investment?
Most shareholders would probably be pleased with LGI Homes, Inc. for providing a total return of 158% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
As we noted earlier, LGI Homes pays its CEO lower than the norm for similar-sized companies belonging to the same industry. Considering robust earnings growth, we believe Eric to be modestly paid. And given most shareholders are probably very happy with recent shareholder returns, they might even think Eric deserves a raise!
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 4 warning signs for LGI Homes (of which 1 shouldn't be ignored!) that you should know about in order to have a holistic understanding of the stock.
Switching gears from LGI Homes, 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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