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Scott Donnelly became the CEO of Textron Inc. (NYSE:TXT) in 2009, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Textron.
How Does Total Compensation For Scott Donnelly Compare With Other Companies In The Industry?
According to our data, Textron Inc. has a market capitalization of US$11b, and paid its CEO total annual compensation worth US$19m over the year to January 2020. That's a notable increase of 36% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.2m.
For comparison, other companies in the industry with market capitalizations above US$8.0b, reported a median total CEO compensation of US$18m. So it looks like Textron compensates Scott Donnelly in line with the median for the industry. Furthermore, Scott Donnelly directly owns US$30m worth of shares in the company, implying that they are deeply invested in the company's success.
Speaking on an industry level, nearly 17% of total compensation represents salary, while the remainder of 83% is other remuneration. Textron sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
A Look at Textron Inc.'s Growth Numbers
Over the last three years, Textron Inc. has shrunk its earnings per share by 20% per year. In the last year, its revenue is down 10%.
The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Textron Inc. Been A Good Investment?
Given the total shareholder loss of 17% over three years, many shareholders in Textron Inc. are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be lessto generous with CEO compensation.
As we touched on above, Textron Inc. is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. On the other hand, EPS growth and total shareholder return have been negative for the last three years. We'd stop short of saying compensation is inappropriate, but we would understand if shareholders had questions regarding a future raise.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 4 warning signs for Textron that investors should look into moving forward.
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.
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.
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