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In 2016 Sean Keohane was appointed CEO of Cabot Corporation (NYSE:CBT). First, this article will compare CEO compensation with compensation at similar sized 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. This process should give us an idea about how appropriately the CEO is paid.
How Does Sean Keohane’s Compensation Compare With Similar Sized Companies?
At the time of writing our data says that Cabot Corporation has a market cap of US$2.6b, and is paying total annual CEO compensation of US$6.8m. (This figure is for the year to 2018). That’s a notable increase of 22% on last year. While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$938k. We examined companies with market caps from US$2.0b to US$6.4b, and discovered that the median CEO compensation of that group was US$4.8m.
Thus we can conclude that Sean Keohane receives more in total compensation than the median of a group of companies in the same market, and of similar size to Cabot Corporation. 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.
The graphic below shows how CEO compensation at Cabot has changed from year to year.
Is Cabot Corporation Growing?
Cabot Corporation has increased its earnings per share (EPS) by an average of 18% a year, over the last three years (using a line of best fit). Its revenue is up 18% over last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. It could be important to check this free visual depiction of what analysts expect for the future.
Has Cabot Corporation Been A Good Investment?
Cabot Corporation has generated a total shareholder return of 15% over three years, so most shareholders would 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.
We compared total CEO remuneration at Cabot Corporation with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of that group.
Importantly, though, the company has impressed with its earnings per share growth, over three years. Looking at the same time period, we think that the shareholder returns are respectable. You might wish to research management further, but on this analysis, considering the EPS growth, we wouldn’t call the CEO pay problematic. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Cabot (free visualization of insider trades).
Important note: Cabot 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.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.