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Is Leggett & Platt, Incorporated's (NYSE:LEG) CEO Pay Justified?

Simply Wall St

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Karl Glassman has been the CEO of Leggett & Platt, Incorporated (NYSE:LEG) since 2016. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. 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. This method should give us information to assess how appropriately the company pays the CEO.

See our latest analysis for Leggett & Platt

How Does Karl Glassman's Compensation Compare With Similar Sized Companies?

According to our data, Leggett & Platt, Incorporated has a market capitalization of US$5.0b, and pays its CEO total annual compensation worth US$11m. (This is based on the year to December 2018). That's a notable increase of 51% on last year. We think total compensation is more important but we note that the CEO salary is lower, at US$1.2m. We examined companies with market caps from US$4.0b to US$12b, and discovered that the median CEO total compensation of that group was US$6.9m.

Thus we can conclude that Karl Glassman receives more in total compensation than the median of a group of companies in the same market, and of similar size to Leggett & Platt, Incorporated. However, this doesn't necessarily mean the pay is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.

You can see, below, how CEO compensation at Leggett & Platt has changed over time.

NYSE:LEG CEO Compensation, June 14th 2019
NYSE:LEG CEO Compensation, June 14th 2019

Is Leggett & Platt, Incorporated Growing?

Over the last three years Leggett & Platt, Incorporated has shrunk its earnings per share by an average of 7.9% per year (measured with a line of best fit). Its revenue is up 9.6% over last year.

Few shareholders would be pleased to read that earnings per share are lower over three years. The fairly low revenue growth fails to impress given that the earnings per share is down. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. It could be important to check this free visual depiction of what analysts expect for the future.

Has Leggett & Platt, Incorporated Been A Good Investment?

Since shareholders would have lost about 17% over three years, some Leggett & Platt, Incorporated shareholders would surely be feeling negative emotions. So shareholders would probably think the company shouldn't be too generous with CEO compensation.

In Summary...

We compared total CEO remuneration at Leggett & Platt, Incorporated with the amount paid at companies with a similar market capitalization. We found that it pays well over the median amount paid in the benchmark group.

We think many shareholders would be underwhelmed with the business growth over the last three years.

Over the same period, investors would have come away with nothing in the way of share price gains. Notably, the CEO remuneration is actually up on last year. In our opinion the CEO might be paid too generously! If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Leggett & Platt.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Thank you for reading.