Kevin Fogarty has been the CEO of Kraton Corporation (NYSE:KRA) since 2008. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. 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 Kevin Fogarty’s Compensation Compare With Similar Sized Companies?
According to our data, Kraton Corporation has a market capitalization of US$1.1b, and pays its CEO total annual compensation worth US$5.1m. (This number is for the twelve months until December 2017). While we always look at total compensation first, we note that the salary component is less, at US$913k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$400m to US$1.6b. The median total CEO compensation was US$2.2m.
It would therefore appear that Kraton Corporation pays Kevin Fogarty more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn’t mean the remuneration is too high. 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 Kraton has changed from year to year.
Is Kraton Corporation Growing?
Kraton Corporation has increased its earnings per share (EPS) by an average of 14% a year, over the last three years (using a line of best fit). It achieved revenue growth of 2.6% over the last year.
This demonstrates that the company has been improving recently. A good result. It’s good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. You might want to check this free visual report on analyst forecasts for future earnings.
Has Kraton Corporation Been A Good Investment?
Most shareholders would probably be pleased with Kraton Corporation for providing a total return of 119% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
We compared total CEO remuneration at Kraton Corporation with the amount paid at companies with a similar market capitalization. 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. In addition, shareholders have done well over the same time period. As a result of this good performance, the CEO remuneration may well be quite reasonable. Whatever your view on compensation, you might want to check if insiders are buying or selling Kraton shares (free trial).
Important note: Kraton 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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