A Quick Analysis On TE Connectivity's (NYSE:TEL) CEO Compensation
Terrence Curtin has been the CEO of TE Connectivity Ltd. (NYSE:TEL) since 2017, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for TE Connectivity.
View our latest analysis for TE Connectivity
How Does Total Compensation For Terrence Curtin Compare With Other Companies In The Industry?
Our data indicates that TE Connectivity Ltd. has a market capitalization of US$40b, and total annual CEO compensation was reported as US$11m for the year to September 2020. We note that's an increase of 14% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.2m.
For comparison, other companies in the industry with market capitalizations above US$8.0b, reported a median total CEO compensation of US$9.0m. From this we gather that Terrence Curtin is paid around the median for CEOs in the industry. Furthermore, Terrence Curtin directly owns US$11m worth of shares in the company, implying that they are deeply invested in the company's success.
Component | 2020 | 2019 | Proportion (2020) |
Salary | US$1.2m | US$1.2m | 11% |
Other | US$9.4m | US$8.1m | 89% |
Total Compensation | US$11m | US$9.3m | 100% |
On an industry level, roughly 34% of total compensation represents salary and 66% is other remuneration. TE Connectivity sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
TE Connectivity Ltd.'s Growth
Over the last three years, TE Connectivity Ltd. has shrunk its earnings per share by 55% per year. In the last year, its revenue is down 5.6%.
Few shareholders would be pleased to read that EPS have declined. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 TE Connectivity Ltd. Been A Good Investment?
With a total shareholder return of 23% over three years, TE Connectivity Ltd. shareholders would, in general, 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.
In Summary...
As we touched on above, TE Connectivity Ltd. 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. TE Connectivity has had a tough time in recent years, with declining EPS growth, and although shareholder returns are stable, they are hardly worth celebrating. This doesn't compare well with CEO compensation, which is close to the industry median. We wouldn't go as far as saying CEO compensation is inappropriate, but we don't think 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 TE Connectivity that investors should think about before committing capital to this stock.
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.
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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