Gregg Sengstack became the CEO of Franklin Electric Co., Inc. (NASDAQ:FELE) in 2014, 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 evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Comparing Franklin Electric Co., Inc.'s CEO Compensation With the industry
At the time of writing, our data shows that Franklin Electric Co., Inc. has a market capitalization of US$2.8b, and reported total annual CEO compensation of US$6.4m for the year to December 2019. We note that's an increase of 25% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$798k.
On comparing similar companies from the same industry with market caps ranging from US$2.0b to US$6.4b, we found that the median CEO total compensation was US$6.4m. This suggests that Franklin Electric remunerates its CEO largely in line with the industry average. Moreover, Gregg Sengstack also holds US$24m worth of Franklin Electric stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
On an industry level, around 16% of total compensation represents salary and 84% is other remuneration. In Franklin Electric's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
Franklin Electric Co., Inc.'s Growth
Earnings per share at Franklin Electric Co., Inc. are much the same as they were three years ago, albeit with slightly higher. It saw its revenue drop 4.7% over the last year.
We would prefer it if there was revenue growth, but the modest EPSgrowth gives us some relief. 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 Franklin Electric Co., Inc. Been A Good Investment?
Most shareholders would probably be pleased with Franklin Electric Co., Inc. for providing a total return of 61% 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.
As we touched on above, Franklin Electric Co., 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. But the business isn't reporting great numbers in terms of EPS growth. On the other hand, shareholder returns over the same period have been very healthy. We would like to see EPS growth from the business, although we wouldn't say the CEO compensation is high.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 1 warning sign for Franklin Electric that investors should think about before committing capital to this stock.
Important note: Franklin Electric is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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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