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Here's Why Shareholders May Want To Be Cautious With Increasing AMETEK, Inc.'s (NYSE:AME) CEO Pay Packet

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Performance at AMETEK, Inc. (NYSE:AME) has been reasonably good and CEO Dave Zapico has done a decent job of steering the company in the right direction. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 06 May 2021. However, some shareholders may still want to keep CEO compensation within reason.

See our latest analysis for AMETEK

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

At the time of writing, our data shows that AMETEK, Inc. has a market capitalization of US$31b, and reported total annual CEO compensation of US$8.5m for the year to December 2020. We note that's a decrease of 16% compared to last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.1m.

In comparison with other companies in the industry with market capitalizations over US$8.0b , the reported median total CEO compensation was US$6.0m. Accordingly, our analysis reveals that AMETEK, Inc. pays Dave Zapico north of the industry median. What's more, Dave Zapico holds US$29m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component

2020

2019

Proportion (2020)

Salary

US$1.1m

US$1.3m

13%

Other

US$7.4m

US$8.9m

87%

Total Compensation

US$8.5m

US$10m

100%

Speaking on an industry level, nearly 24% of total compensation represents salary, while the remainder of 76% is other remuneration. It's interesting to note that AMETEK allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

ceo-compensation
ceo-compensation

A Look at AMETEK, Inc.'s Growth Numbers

AMETEK, Inc. has seen its earnings per share (EPS) increase by 8.7% a year over the past three years. Its revenue is down 12% over the previous year.

We would prefer it if there was revenue growth, but it is good to see a modest EPS growth at least. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has AMETEK, Inc. Been A Good Investment?

Most shareholders would probably be pleased with AMETEK, Inc. for providing a total return of 100% over three years. 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.

In Summary...

Seeing that the company has put up a decent performance, only a few shareholders, if any at all, might have questions about the CEO pay in the upcoming AGM. However, if the board proposes to increase the compensation, some shareholders might have questions given that the CEO is already being paid higher than the industry.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 2 warning signs for AMETEK that investors should be aware of in a dynamic business environment.

Switching gears from AMETEK, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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 (at) simplywallst.com.