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Paul Manning has been the CEO of Sensient Technologies Corporation (NYSE:SXT) since 2014, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether Sensient Technologies pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Comparing Sensient Technologies Corporation's CEO Compensation With the industry
Our data indicates that Sensient Technologies Corporation has a market capitalization of US$3.1b, and total annual CEO compensation was reported as US$5.8m for the year to December 2019. Notably, that's an increase of 26% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$945k.
For comparison, other companies in the same industry with market capitalizations ranging between US$2.0b and US$6.4b had a median total CEO compensation of US$5.5m. This suggests that Sensient Technologies remunerates its CEO largely in line with the industry average. What's more, Paul Manning holds US$5.2m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
On an industry level, around 19% of total compensation represents salary and 81% is other remuneration. Sensient Technologies 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 Sensient Technologies Corporation's Growth Numbers
Over the last three years, Sensient Technologies Corporation has shrunk its earnings per share by 13% per year. In the last year, its revenue changed by just 1.0%.
Overall this is not a very positive result for shareholders. And the flat revenue is seriously uninspiring. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Sensient Technologies Corporation Been A Good Investment?
With a total shareholder return of 5.1% over three years, Sensient Technologies Corporation has done okay by shareholders. But they would probably prefer not to see CEO compensation far in excess of the median.
As we noted earlier, Sensient Technologies pays its CEO in line with similar-sized companies belonging to the same industry. Sensient Technologies has had a poor showing when it comes to EPS growth, and it's tough to say that shareholder returns have done much to excite us. This doesn't compare well with CEO compensation, which is largely in line with the industry median. We would stop short of the compensation is inappropriate, but we can't say the executive is underpaid.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 4 warning signs for Sensient Technologies that investors should think about before committing capital to this stock.
Important note: Sensient Technologies 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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