In 2016 Jim Snee was appointed CEO of Hormel Foods Corporation (NYSE:HRL). First, this article will compare CEO compensation with compensation at other large companies. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Jim Snee's Compensation Compare With Similar Sized Companies?
According to our data, Hormel Foods Corporation has a market capitalization of US$22b, and pays its CEO total annual compensation worth US$6.4m. (This number is for the twelve months until October 2018). That's a modest increase of 0.5% on the prior year year. We think total compensation is more important but we note that the CEO salary is lower, at US$883k. When we examined a group of companies with market caps over US$8.0b, we found that their median CEO total compensation was US$11m. (We took a wide range because the CEOs of massive companies tend to be paid similar amounts - even though some are quite a bit bigger than others).
Most shareholders would consider it a positive that Jim Snee takes less in total compensation than the CEOs of most other large companies, leaving more for shareholders. Though positive, it's important we delve into the performance of the actual business.
You can see, below, how CEO compensation at Hormel Foods has changed over time.
Is Hormel Foods Corporation Growing?
On average over the last three years, Hormel Foods Corporation has grown earnings per share (EPS) by 7.4% each year (using a line of best fit). In the last year, its revenue is up 3.9%.
I would argue that the improvement in revenue isn't particularly impressive, but it is good to see modest EPS growth. So there are some positives here, but not enough to earn high praise. Shareholders might be interested in this free visualization of analyst forecasts.
Has Hormel Foods Corporation Been A Good Investment?
With a total shareholder return of 13% over three years, Hormel Foods Corporation shareholders would, in general, be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.
It appears that Hormel Foods Corporation remunerates its CEO below most large companies.
Jim Snee is paid less than what is normal at large companies, and but overall performance has left me uninspired. But on this analysis I see no issue with the CEO compensation. Whatever your view on compensation, you might want to check if insiders are buying or selling Hormel Foods shares (free trial).
Important note: Hormel Foods 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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