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Is Snap-on Incorporated (NYSE:SNA) Excessively Paying Its CEO?

Simply Wall St

Nicholas Pinchuk became the CEO of Snap-on Incorporated (NYSE:SNA) in 2007. First, this article will compare CEO compensation with compensation at similar sized 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. The aim of all this is to consider the appropriateness of CEO pay levels.

View our latest analysis for Snap-on

How Does Nicholas Pinchuk's Compensation Compare With Similar Sized Companies?

According to our data, Snap-on Incorporated has a market capitalization of US$8.8b, and paid its CEO total annual compensation worth US$8.9m over 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. 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 looked at a group of companies with market capitalizations from US$4.0b to US$12b, and the median CEO total compensation was US$6.4m.

Thus we can conclude that Nicholas Pinchuk receives more in total compensation than the median of a group of companies in the same market, and of similar size to Snap-on Incorporated. However, this doesn't necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.

You can see, below, how CEO compensation at Snap-on has changed over time.

NYSE:SNA CEO Compensation, February 7th 2020

Is Snap-on Incorporated Growing?

Snap-on Incorporated has increased its earnings per share (EPS) by an average of 12% a year, over the last three years (using a line of best fit). In the last year, its revenue changed by just 0.6%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. While it would be good to see revenue growth, profits matter more in the end. It could be important to check this free visual depiction of what analysts expect for the future.

Has Snap-on Incorporated Been A Good Investment?

Snap-on Incorporated has not done too badly by shareholders, with a total return of 0.5%, over three years. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

We compared the total CEO remuneration paid by Snap-on Incorporated, and compared it to remuneration at a group of similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.

Importantly, though, the company has impressed with its earnings per share growth, over three years. We also note that, over the same time frame, shareholder returns haven't been bad. While it may be worth researching further, we don't see a problem with the CEO pay, given the good EPS growth. Shareholders may want to check for free if Snap-on insiders are buying or selling shares.

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.

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.

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