Lawrence Kurzius became the CEO of McCormick & Company, Incorporated (NYSE:MKC) in 2016, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for McCormick.
Comparing McCormick & Company, Incorporated's CEO Compensation With the industry
At the time of writing, our data shows that McCormick & Company, Incorporated has a market capitalization of US$26b, and reported total annual CEO compensation of US$13m for the year to November 2019. Notably, that's a decrease of 14% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.3m.
On comparing similar companies in the industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$12m. So it looks like McCormick compensates Lawrence Kurzius in line with the median for the industry. Moreover, Lawrence Kurzius also holds US$22m worth of McCormick stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Speaking on an industry level, nearly 22% of total compensation represents salary, while the remainder of 78% is other remuneration. McCormick sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
A Look at McCormick & Company, Incorporated's Growth Numbers
McCormick & Company, Incorporated's earnings per share (EPS) grew 14% per year over the last three years. Its revenue is up 2.0% over the last year.
This demonstrates that the company has been improving recently and is good news for the shareholders. It's also good to see modest revenue growth, suggesting the underlying business is healthy. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has McCormick & Company, Incorporated Been A Good Investment?
Boasting a total shareholder return of 122% over three years, McCormick & Company, Incorporated 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.
As we touched on above, McCormick & Company, Incorporated is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. The company is growing earnings per share and total shareholder returns have been pleasing. Although the pay is close to the industry median, overall performance is excellent, so we don't think the CEO is paid too generously. Also, such solid returns might lead to shareholders warming to the idea of a bump in pay.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 1 warning sign for McCormick that investors should be aware of in a dynamic business environment.
Important note: McCormick is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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