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Is Stanley Black & Decker, Inc. (NYSE:SWK) Overpaying Its CEO?

Arjun Bhatia

In 2016 Jim Loree was appointed CEO of Stanley Black & Decker, Inc. (NYSE:SWK). 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 – as a second measure of performance – we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.

See our latest analysis for Stanley Black & Decker

How Does Jim Loree’s Compensation Compare With Similar Sized Companies?

Our data indicates that Stanley Black & Decker, Inc. is worth US$19b, and total annual CEO compensation is US$16m. (This is based on the year to 2017). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$1.2m. We took a group of companies with market capitalizations over US$8.0b, and calculated the median CEO compensation to be US$11m. (We took a wide range because the CEOs of massive companies tend to be paid similar amounts – even though some are quite a bit bigger than others).

Thus we can conclude that Jim Loree receives more in total compensation than the median of a group of large companies in the same market as Stanley Black & Decker, Inc.. However, this doesn’t necessarily mean the pay is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.

You can see, below, how CEO compensation at Stanley Black & Decker has changed over time.

NYSE:SWK CEO Compensation January 9th 19

Is Stanley Black & Decker, Inc. Growing?

On average over the last three years, Stanley Black & Decker, Inc. has grown earnings per share (EPS) by 6.2% each year (using a line of best fit). Its revenue is up 9.5% over last year.

I would argue that the improvement in revenue isn’t particularly impressive, but the modest improvement in EPS is good. So there are some positives here, but not enough to earn high praise.

Shareholders might be interested in this free visualization of analyst forecasts. .

Has Stanley Black & Decker, Inc. Been A Good Investment?

Most shareholders would probably be pleased with Stanley Black & Decker, Inc. for providing a total return of 38% over three years. 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…

We compared the total CEO remuneration paid by Stanley Black & Decker, Inc., and compared it to remuneration at a group of other large companies. We found that it pays well over the median amount paid in the benchmark group.

Over the last three years returns to investors have been great, though we might have liked stronger business growth. Considering this fine result for investors, we daresay the CEO compensation might be apt. Whatever your view on compensation, you might want to check if insiders are buying or selling Stanley Black & Decker shares (free trial).

Or you might prefer this data-rich interactive visualization of historic revenue and earnings.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.