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Joe Sanderson has been the CEO of Sanderson Farms, Inc. (NASDAQ:SAFM) since 1989. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. 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 Joe Sanderson's Compensation Compare With Similar Sized Companies?
At the time of writing our data says that Sanderson Farms, Inc. has a market cap of US$3.1b, and is paying total annual CEO compensation of US$4.2m. (This figure is for the year to October 2018). We think total compensation is more important but we note that the CEO salary is lower, at US$1.5m. We looked at a group of companies with market capitalizations from US$2.0b to US$6.4b, and the median CEO total compensation was US$5.2m.
That means Joe Sanderson receives fairly typical remuneration for the CEO of a company that size. While this data point isn't particularly informative alone, it gains more meaning when considered with business performance.
You can see, below, how CEO compensation at Sanderson Farms has changed over time.
Is Sanderson Farms, Inc. Growing?
Over the last three years Sanderson Farms, Inc. has shrunk its earnings per share by an average of 26% per year (measured with a line of best fit). Its revenue is down -5.8% over last year.
Sadly for shareholders, earnings per share are actually down, over three years. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. You might want to check this free visual report on analyst forecasts for future earnings.
Has Sanderson Farms, Inc. Been A Good Investment?
Most shareholders would probably be pleased with Sanderson Farms, Inc. for providing a total return of 74% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
Remuneration for Joe Sanderson is close enough to the median pay for a CEO of a similar sized company .
We're not seeing great strides in earnings per share, but the company has clearly pleased some investors, given the returns over the last three years. So we can't see a reason to suggest the pay is inappropriate. Whatever your view on compensation, you might want to check if insiders are buying or selling Sanderson Farms shares (free trial).
Important note: Sanderson Farms 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.
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 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. Thank you for reading.