Key Insights

• Patrick Industries' Annual General Meeting to take place on 16th of May
• Total pay for CEO Andy Nemeth includes US$817.3k salary
• The total compensation is similar to the average for the industry
• Over the past three years, Patrick Industries' EPS grew by 6.6% and over the past three years, the total shareholder return was 35%

Under the guidance of CEO Andy Nemeth, Patrick Industries, Inc. (NASDAQ:PATK) has performed reasonably well recently. As shareholders go into the upcoming AGM on 16th of May, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. Here is our take on why we think the CEO compensation looks appropriate.

Comparing Patrick Industries, Inc.'s CEO Compensation With The Industry

According to our data, Patrick Industries, Inc. has a market capitalization of US$2.6b, and paid its CEO total annual compensation worth US$6.7m over the year to December 2023. We note that's a decrease of 14% compared to last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$817k.

On examining similar-sized companies in the American Auto Components industry with market capitalizations between US$2.0b and US$6.4b, we discovered that the median CEO total compensation of that group was US$6.2m. This suggests that Patrick Industries remunerates its CEO largely in line with the industry average. What's more, Andy Nemeth holds US$32m 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, roughly 13% of total compensation represents salary and 87% is other remuneration. There isn't a significant difference between Patrick Industries and the broader market, in terms of salary allocation in the overall compensation package. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

Patrick Industries, Inc.'s Growth

Over the past three years, Patrick Industries, Inc. has seen its earnings per share (EPS) grow by 6.6% per year. It saw its revenue drop 21% over the last year.

We would argue that the lack of revenue growth in the last year is less than ideal, but the modest EPS growth gives us some relief. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Patrick Industries, Inc. Been A Good Investment?

Most shareholders would probably be pleased with Patrick Industries, Inc. for providing a total return of 35% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

Seeing that the company has put up a decent performance, only a few shareholders, if any at all, might have questions about the CEO pay in the upcoming AGM. Despite the pleasing results, we still think that any proposed increases to CEO compensation will be examined based on a case by case basis and linked to performance outcomes.

CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 3 warning signs for Patrick Industries that investors should look into moving forward.

Important note: Patrick Industries is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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.