Mark Sutton became the CEO of International Paper Company (NYSE:IP) in 2014. This analysis aims first to contrast CEO compensation with other large companies. Next, we'll consider growth that the business demonstrates. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Mark Sutton's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that International Paper Company has a market cap of US$18b, and reported total annual CEO compensation of US$22m for the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$1.4m. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We took a group of companies with market capitalizations over US$8.0b, and calculated the median CEO total compensation to be US$11m. There aren't very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.
As you can see, Mark Sutton is paid more than the median CEO pay at large companies, in the same market. However, this does not necessarily mean International Paper Company is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance.
The graphic below shows how CEO compensation at International Paper has changed from year to year.
Is International Paper Company Growing?
International Paper Company has increased its earnings per share (EPS) by an average of 28% a year, over the last three years (using a line of best fit). Its revenue is down 1.0% over last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. It could be important to check this free visual depiction of what analysts expect for the future.
Has International Paper Company Been A Good Investment?
Given the total loss of 13% over three years, many shareholders in International Paper Company are probably rather dissatisfied, to say the least. It therefore might be upsetting for shareholders if the CEO were paid generously.
We compared the total CEO remuneration paid by International Paper Company, and compared it to remuneration at a group of other large companies. Our data suggests that it pays above the median CEO pay within that group.
However, the earnings per share growth over three years is certainly impressive. Having said that, shareholders may be disappointed with the weak returns over the last three years. While EPS is positive, we'd say shareholders would want better returns before the CEO is paid much more. Whatever your view on compensation, you might want to check if insiders are buying or selling International Paper shares (free trial).
If you want to buy a stock that is better than International Paper, 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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