Karl Glassman became the CEO of Leggett & Platt, Incorporated (NYSE:LEG) in 2016. First, this article will compare CEO compensation with compensation at similar sized companies. 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 Karl Glassman's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Leggett & Platt, Incorporated has a market cap of US$6.6b, and reported total annual CEO compensation of US$11m for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$1.2m. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. When we examined a selection of companies with market caps ranging from US$4.0b to US$12b, we found the median CEO total compensation was US$6.5m.
As you can see, Karl Glassman is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Leggett & Platt, Incorporated is paying too much. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
You can see, below, how CEO compensation at Leggett & Platt has changed over time.
Is Leggett & Platt, Incorporated Growing?
Over the last three years Leggett & Platt, Incorporated has shrunk its earnings per share by an average of 8.0% per year (measured with a line of best fit). It achieved revenue growth of 11% over the last year.
Unfortunately, earnings per share have trended lower over the last three years. There's no doubt that the silver lining is that revenue is up. But it isn't sufficiently fast growth to overlook the fact that earnings per share has gone backwards over three years. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. It could be important to check this free visual depiction of what analysts expect for the future.
Has Leggett & Platt, Incorporated Been A Good Investment?
With a total shareholder return of 18% over three years, Leggett & Platt, Incorporated shareholders would, in general, be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.
We compared total CEO remuneration at Leggett & Platt, Incorporated with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of that group.
We think many shareholders would be underwhelmed with the business growth over the last three years. And while shareholder returns have been respectable, they have hardly been superb. So you may want to delve deeper, because we don't think the CEO pay is too low. Whatever your view on compensation, you might want to check if insiders are buying or selling Leggett & Platt shares (free trial).
If you want to buy a stock that is better than Leggett & Platt, this free list of high return, low debt companies is a great place to look.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned.
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