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How Is Greif's (NYSE:GEF) CEO Paid Relative To Peers?

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Pete Watson has been the CEO of Greif, Inc. (NYSE:GEF) since 2015, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

View our latest analysis for Greif

Comparing Greif, Inc.'s CEO Compensation With the industry

According to our data, Greif, Inc. has a market capitalization of US$1.8b, and paid its CEO total annual compensation worth US$8.0m over the year to October 2019. We note that's a decrease of 22% compared to last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.1m.

In comparison with other companies in the industry with market capitalizations ranging from US$1.0b to US$3.2b, the reported median CEO total compensation was US$1.1m. This suggests that Pete Watson is paid more than the median for the industry. Furthermore, Pete Watson directly owns US$7.1m worth of shares in the company, implying that they are deeply invested in the company's success.

Component

2019

2018

Proportion (2019)

Salary

US$1.1m

US$1.0m

13%

Other

US$6.9m

US$9.2m

87%

Total Compensation

US$8.0m

US$10m

100%

On an industry level, roughly 13% of total compensation represents salary and 87% is other remuneration. Greif is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

ceo-compensation
ceo-compensation

A Look at Greif, Inc.'s Growth Numbers

Greif, Inc.'s earnings per share (EPS) grew 11% per year over the last three years. Its revenue is up 5.3% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's nice to see revenue heading northwards, as this is consistent with healthy business conditions. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Greif, Inc. Been A Good Investment?

With a three year total loss of 29% for the shareholders, Greif, Inc. would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be lessto generous with CEO compensation.

In Summary...

As previously discussed, Pete is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. However, we must not forget that the EPS growth has been very strong, but shareholder returns — over the same period — have been disappointing. Although we'd stop short of calling it inappropriate, we think Pete is earning a very handsome sum.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 2 warning signs for Greif you should be aware of, and 1 of them is significant.

Important note: Greif is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.