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In 2014 Rich Kyle was appointed CEO of The Timken Company (NYSE:TKR). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. 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 process should give us an idea about how appropriately the CEO is paid.
How Does Rich Kyle's Compensation Compare With Similar Sized Companies?
At the time of writing our data says that The Timken Company has a market cap of US$3.8b, and is paying total annual CEO compensation of US$8.7m. (This number is for the twelve months until December 2018). That's just a smallish increase of 1.4% on last year. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$942k. 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$5.1m.
As you can see, Rich Kyle is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean The Timken Company is paying too much. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
The graphic below shows how CEO compensation at Timken has changed from year to year.
Is The Timken Company Growing?
Over the last three years The Timken Company has grown its earnings per share (EPS) by an average of 38% per year (using a line of best fit). It achieved revenue growth of 16% over the last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. You might want to check this free visual report on analyst forecasts for future earnings.
Has The Timken Company Been A Good Investment?
Boasting a total shareholder return of 62% over three years, The Timken Company has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
We compared the total CEO remuneration paid by The Timken Company, and compared it to remuneration at a group of similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.
However we must not forget that the EPS growth has been very strong over three years. Even better, returns to shareholders have been plentiful, over the same time period. As a result of this good performance, the CEO remuneration may well be quite reasonable. Whatever your view on compensation, you might want to check if insiders are buying or selling Timken shares (free trial).
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity 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.