In 2005 H. Killingstad was appointed CEO of Tennant Company (NYSE:TNC). 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. This process should give us an idea about how appropriately the CEO is paid.
How Does H. Killingstad's Compensation Compare With Similar Sized Companies?
According to our data, Tennant Company has a market capitalization of US$1.2b, and pays its CEO total annual compensation worth US$3.2m. (This figure is for the year to December 2017). We think total compensation is more important but we note that the CEO salary is lower, at US$726k. We examined companies with market caps from US$1.0b to US$3.2b, and discovered that the median CEO total compensation of that group was US$3.6m.
That means H. Killingstad receives fairly typical remuneration for the CEO of a company that size. This doesn't tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context.
The graphic below shows how CEO compensation at Tennant has changed from year to year.
Is Tennant Company Growing?
Over the last three years Tennant Company has shrunk its earnings per share by an average of 31% per year (measured with a line of best fit). Its revenue is up 12% over last year.
Sadly for shareholders, earnings per share are actually down, over three years. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for me to put aside my concerns around earnings. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Shareholders might be interested in this free visualization of analyst forecasts.
Has Tennant Company Been A Good Investment?
With a total shareholder return of 32% over three years, Tennant Company shareholders would, in general, be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
H. Killingstad is paid around the same as most CEOs of similar size companies.
We feel that earnings per share have been a bit disappointing, but and we don't think the total returns are amazing. We do not think the CEO pay is a problem, but one might argue that the company should improve returns to shareholders before increasing it. Shareholders may want to check for free if Tennant insiders are buying or selling shares.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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