Should You Be Pleased About The CEO Pay At Fortive Corporation's (NYSE:FTV)
In 2016 Jim Lico was appointed CEO of Fortive Corporation (NYSE:FTV). First, this article will compare CEO compensation with compensation at other large companies. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.
View our latest analysis for Fortive
How Does Jim Lico's Compensation Compare With Similar Sized Companies?
Our data indicates that Fortive Corporation is worth US$24b, and total annual CEO compensation is US$14m. (This is based on the year to December 2018). We think total compensation is more important but we note that the CEO salary is lower, at US$1.1m. When we examined a group of companies with market caps over US$8.0b, we found that their median CEO total compensation was US$11m. There aren't very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.
That means Jim Lico receives fairly typical remuneration for the CEO of a large company. 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 Fortive has changed over time.
Is Fortive Corporation Growing?
Over the last three years Fortive Corporation has shrunk its earnings per share by an average of 1.3% per year (measured with a line of best fit). Its revenue is up 20% over last year.
The lack of earnings per share growth in the last three years is unimpressive. 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. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. It could be important to check this free visual depiction of what analysts expect for the future.
Has Fortive Corporation Been A Good Investment?
I think that the total shareholder return of 33%, over three years, would leave most Fortive Corporation shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.
In Summary...
Jim Lico is paid around what is normal the leaders of larger companies.
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 think most shareholders wouldn't be too worried about CEO compensation, which is close to the median for large companies. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Fortive (free visualization of insider trades).
Important note: Fortive 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 editorial-team@simplywallst.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.
