In 2011 Vince Forlenza was appointed CEO of Becton, Dickinson and Company (NYSE:BDX). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. Then we'll look at a snap shot of the business growth. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Vince Forlenza's Compensation Compare With Similar Sized Companies?
Our data indicates that Becton, Dickinson and Company is worth US$66b, and total annual CEO compensation was reported as US$15m for the year to September 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$1.2m. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. When we examined a group of companies with market caps over US$8.0b, we found that their median CEO total compensation was US$11m. Once you start looking at very large companies, you need to take a broader range, because there simply aren't that many of them.
It would therefore appear that Becton, Dickinson and Company pays Vince Forlenza more than the median CEO remuneration at large companies, in the same market. However, this fact alone doesn't mean the remuneration is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.
You can see, below, how CEO compensation at Becton Dickinson has changed over time.
Is Becton, Dickinson and Company Growing?
On average over the last three years, Becton, Dickinson and Company has shrunk earnings per share by 35% each year (measured with a line of best fit). Its revenue is up 16% over last year.
Few shareholders would be pleased to read that earnings per share are lower over three years. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for me to put aside my concerns around earnings. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Shareholders might be interested in this free visualization of analyst forecasts.
Has Becton, Dickinson and Company Been A Good Investment?
Most shareholders would probably be pleased with Becton, Dickinson and Company for providing a total return of 53% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
We compared the total CEO remuneration paid by Becton, Dickinson and Company, and compared it to remuneration at a group of other large companies. Our data suggests that it pays above the median CEO pay within that group.
Neither earnings per share nor revenue have been growing sufficiently to impress us, over the last three years. On the other hand, returns have been good, so the company is doing something right. Considering this, shareholders are probably not too worried about the CEO compensation. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Becton Dickinson (free visualization of insider trades).
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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