Key Insights

• Ferguson will host its Annual General Meeting on 28th of November
• Salary of US$1.19m is part of CEO Kevin Murphy's total remuneration
• The overall pay is 45% below the industry average
• Ferguson's EPS grew by 29% over the past three years while total shareholder return over the past three years was 64%

The solid performance at Ferguson plc (NYSE:FERG) has been impressive and shareholders will probably be pleased to know that CEO Kevin Murphy has delivered. At the upcoming AGM on 28th of November, they would be interested to hear about the company strategy going forward and get a chance to cast their votes on resolutions such as executive remuneration and other company matters. Here we will show why we think CEO compensation is appropriate and discuss the case for a pay rise.

See our latest analysis for Ferguson

How Does Total Compensation For Kevin Murphy Compare With Other Companies In The Industry?

According to our data, Ferguson plc has a market capitalization of US$34b, and paid its CEO total annual compensation worth US$5.4m over the year to July 2023. That's a notable increase of 12% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.2m.

In comparison with other companies in the American Trade Distributors industry with market capitalizations over US$8.0b, the reported median total CEO compensation was US$10.0m. This suggests that Kevin Murphy is paid below the industry median. What's more, Kevin Murphy holds US$21m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Speaking on an industry level, nearly 16% of total compensation represents salary, while the remainder of 84% is other remuneration. According to our research, Ferguson has allocated a higher percentage of pay to salary in comparison to the wider industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

Ferguson plc's Growth

Ferguson plc has seen its earnings per share (EPS) increase by 29% a year over the past three years. It achieved revenue growth of 4.1% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. 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 Ferguson plc Been A Good Investment?

We think that the total shareholder return of 64%, over three years, would leave most Ferguson plc shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

Given the company's decent performance, the CEO remuneration policy might not be shareholders' central point of focus in the AGM. However, investors will get the chance to engage on key strategic initiatives and future growth opportunities for the company and set their longer-term expectations.

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 did our research and spotted 3 warning signs for Ferguson that investors should look into moving forward.

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.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.