Sam Allen has been the CEO of Deere & Company (NYSE:DE) since 2009. 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 Sam Allen's Compensation Compare With Similar Sized Companies?
Our data indicates that Deere & Company is worth US$52b, and total annual CEO compensation is US$19m. (This is based on the year to October 2018). While we always look at total compensation first, we note that the salary component is less, at US$1.5m. We looked at a group of companies with market capitalizations over US$8.0b and the 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.
As you can see, Sam Allen is paid more than the median CEO pay at large companies, in the same market. However, this does not necessarily mean Deere & Company is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance.
The graphic below shows how CEO compensation at Deere has changed from year to year.
Is Deere & Company Growing?
On average over the last three years, Deere & Company has grown earnings per share (EPS) by 29% each year (using a line of best fit). In the last year, its revenue is up 9.0%.
This demonstrates that the company has been improving recently. A good result. It's nice to see a little revenue growth, as this is consistent with healthy business conditions. It could be important to check this free visual depiction of what analysts expect for the future.
Has Deere & Company Been A Good Investment?
I think that the total shareholder return of 114%, over three years, would leave most Deere & Company shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.
We examined the amount Deere & Company pays its CEO, and compared it to the amount paid by other large companies. Our data suggests that it pays above the median CEO pay within that group.
However we must not forget that the EPS growth has been very strong over three years. In addition, shareholders have done well over the same time period. As a result of this good performance, the CEO remuneration may well be quite reasonable. Whatever your view on compensation, you might want to check if insiders are buying or selling Deere shares (free trial).
Important note: Deere may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
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