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It would be hard to discount the role that CEO John Stauch has played in delivering the impressive results at Pentair plc (NYSE:PNR) recently. Shareholders will have this at the front of their minds in the upcoming AGM on 04 May 2021. It is likely that the focus will be on company strategy going forward as shareholders hear from the board and cast their votes on resolutions such as executive remuneration and other matters. Here is our take on why we think CEO compensation is not extravagant.
Comparing Pentair plc's CEO Compensation With the industry
At the time of writing, our data shows that Pentair plc has a market capitalization of US$11b, and reported total annual CEO compensation of US$9.3m for the year to December 2020. That's a notable increase of 46% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$970k.
On comparing similar companies in the industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$8.9m. So it looks like Pentair compensates John Stauch in line with the median for the industry. What's more, John Stauch holds US$17m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Talking in terms of the industry, salary represented approximately 19% of total compensation out of all the companies we analyzed, while other remuneration made up 81% of the pie. In Pentair's case, non-salary compensation represents a greater slice of total remuneration, 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.
Pentair plc's Growth
Pentair plc's earnings per share (EPS) grew 41% per year over the last three years. In the last year, its revenue is up 6.6%.
Shareholders would be glad to know that the company has improved itself over the last few years. It's also good to see modest revenue growth, suggesting the underlying business is healthy. 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 Pentair plc Been A Good Investment?
Most shareholders would probably be pleased with Pentair plc for providing a total return of 46% over three years. 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.
Seeing that the company has put in a relatively good performance, the CEO remuneration policy may not be the focus at the AGM. In fact, strategic decisions that could impact the future of the business might be a far more interesting topic for investors as it would help them set their longer-term expectations.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 2 warning signs for Pentair that you should be aware of before investing.
Switching gears from Pentair, 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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