Tim Donahue became the CEO of Crown Holdings, Inc. (NYSE:CCK) in 2016. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we'll consider growth that the business demonstrates. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.
How Does Tim Donahue's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Crown Holdings, Inc. has a market cap of US$8.6b, and reported total annual CEO compensation of US$9.8m for the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$1.1m. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. We examined companies with market caps from US$4.0b to US$12b, and discovered that the median CEO total compensation of that group was US$6.8m.
As you can see, Tim Donahue is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Crown Holdings, Inc. is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance.
You can see a visual representation of the CEO compensation at Crown Holdings, below.
Is Crown Holdings, Inc. Growing?
On average over the last three years, Crown Holdings, Inc. has shrunk earnings per share by 6.9% each year (measured with a line of best fit). Its revenue is up 18% over last year.
Unfortunately, earnings per share have trended lower over the last three years. There's no doubt that the silver lining is that revenue is up. But it isn't sufficiently fast growth to overlook the fact that earnings per share has gone backwards over three years. 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 Crown Holdings, Inc. Been A Good Investment?
Crown Holdings, Inc. 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 examined the amount Crown Holdings, Inc. pays its CEO, and compared it to the amount paid by similar sized companies. We found that it pays well over the median amount paid in the benchmark group.
We think many shareholders would be underwhelmed with the business growth over the last three years. And shareholder returns are decent but not great. So we doubt many shareholders would consider the CEO pay to be particularly modest! So you may want to check if insiders are buying Crown Holdings shares with their own money (free access).
Important note: Crown Holdings 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.
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If you spot an error that warrants correction, please contact the editor at email@example.com. 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.