This Is Why The Home Depot, Inc.'s (NYSE:HD) CEO Compensation Looks Appropriate

Key Insights

• Home Depot will host its Annual General Meeting on 16th of May

• Salary of US$1.40m is part of CEO Ted Decker's total remuneration

• The total compensation is similar to the average for the industry

• Over the past three years, Home Depot's EPS grew by 8.4% and over the past three years, the total shareholder return was 15%

CEO Ted Decker has done a decent job of delivering relatively good performance at The Home Depot, Inc. (NYSE:HD) recently. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 16th of May. We present our case of why we think CEO compensation looks fair.

See our latest analysis for Home Depot

How Does Total Compensation For Ted Decker Compare With Other Companies In The Industry?

Our data indicates that The Home Depot, Inc. has a market capitalization of US$336b, and total annual CEO compensation was reported as US$14m for the year to January 2024. This means that the compensation hasn't changed much from last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.4m.

For comparison, other companies in the American Specialty Retail industry with market capitalizations above US$8.0b, reported a median total CEO compensation of US$14m. So it looks like Home Depot compensates Ted Decker in line with the median for the industry. Moreover, Ted Decker also holds US$40m worth of Home Depot stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Speaking on an industry level, nearly 17% of total compensation represents salary, while the remainder of 83% is other remuneration. It's interesting to note that Home Depot 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.

The Home Depot, Inc.'s Growth

Over the past three years, The Home Depot, Inc. has seen its earnings per share (EPS) grow by 8.4% per year. It saw its revenue drop 3.0% over the last year.

We generally like to see a little revenue growth, but the modest EPS growth gives us some relief. It's hard to reach a conclusion about business performance right now. This may be one to watch. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

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

The Home Depot, Inc. has served shareholders reasonably well, with a total return of 15% over three years. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

In Summary...

Given that the company's overall performance has been reasonable, the CEO remuneration policy might not be shareholders' central point of focus in the upcoming AGM. In saying that, any proposed increase to CEO compensation will still be assessed on how reasonable it is based on performance and industry benchmarks.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 2 warning signs for Home Depot 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.

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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.