In 2016 Sean Keohane was appointed CEO of Cabot Corporation (NYSE:CBT). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we'll look at a snap shot of the business growth. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.
How Does Sean Keohane's Compensation Compare With Similar Sized Companies?
At the time of writing our data says that Cabot Corporation has a market cap of US$2.4b, and is paying total annual CEO compensation of US$6.8m. (This figure is for the year to September 2018). We think total compensation is more important but we note that the CEO salary is lower, at US$938k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$2.0b to US$6.4b. The median total CEO compensation was US$5.1m.
Thus we can conclude that Sean Keohane receives more in total compensation than the median of a group of companies in the same market, and of similar size to Cabot Corporation. However, this doesn't necessarily mean the pay is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
You can see a visual representation of the CEO compensation at Cabot, below.
Is Cabot Corporation Growing?
On average over the last three years, Cabot Corporation has grown earnings per share (EPS) by 6.3% each year (using a line of best fit). It achieved revenue growth of 14% over the last year.
I think the revenue growth is good. And the improvement in earnings per share is modest but respectable. So while we'd stop just short of calling this a top performer, but we think it is well worth watching. Shareholders might be interested in this free visualization of analyst forecasts.
Has Cabot Corporation Been A Good Investment?
Given the total loss of 8.4% over three years, many shareholders in Cabot Corporation are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
We compared the total CEO remuneration paid by Cabot Corporation, and compared it to remuneration at a group of similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.
The growth in the business has been uninspiring, but the shareholder returns have arguably been worse, over the last three years. Although we'd stop short of calling it inappropriate, we think the CEO compensation is probably more on the generous side of things. Whatever your view on compensation, you might want to check if insiders are buying or selling Cabot shares (free trial).
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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