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Is The Scotts Miracle-Gro Company's (NYSE:SMG) CEO Being Overpaid?

Simply Wall St

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Jim Hagedorn has been the CEO of The Scotts Miracle-Gro Company (NYSE:SMG) since 2001. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.

View our latest analysis for Scotts Miracle-Gro

How Does Jim Hagedorn's Compensation Compare With Similar Sized Companies?

At the time of writing our data says that The Scotts Miracle-Gro Company has a market cap of US$5.5b, and is paying total annual CEO compensation of US$5.2m. (This is based on the year to September 2018). We think total compensation is more important but we note that the CEO salary is lower, at US$1.1m. We looked at a group of companies with market capitalizations from US$4.0b to US$12b, and the median CEO total compensation was US$6.9m.

So Jim Hagedorn receives a similar amount to the median CEO pay, amongst the companies we looked at. This doesn't tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context.

You can see, below, how CEO compensation at Scotts Miracle-Gro has changed over time.

NYSE:SMG CEO Compensation, July 2nd 2019

Is The Scotts Miracle-Gro Company Growing?

Over the last three years The Scotts Miracle-Gro Company has shrunk its earnings per share by an average of 5.0% per year (measured with a line of best fit). Its revenue is up 13% over last year.

Few shareholders would be pleased to read that earnings per share are lower over three years. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for me to put aside my concerns around earnings. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. It could be important to check this free visual depiction of what analysts expect for the future.

Has The Scotts Miracle-Gro Company Been A Good Investment?

Most shareholders would probably be pleased with The Scotts Miracle-Gro Company for providing a total return of 53% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

Remuneration for Jim Hagedorn is close enough to the median pay for a CEO of a similar sized company .

The company isn't growing earnings per share, but shareholder returns have been strong over the last three years. So we doubt many are complaining about the fairly normal CEO pay. So you may want to check if insiders are buying Scotts Miracle-Gro shares with their own money (free access).

If you want to buy a stock that is better than Scotts Miracle-Gro, this free list of high return, low debt companies is a great place to look.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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.