Jim Keane has been the CEO of Steelcase Inc. (NYSE:SCS) since 2014. 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 - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.
How Does Jim Keane's Compensation Compare With Similar Sized Companies?
At the time of writing our data says that Steelcase Inc. has a market cap of US$1.9b, and is paying total annual CEO compensation of US$6.4m. (This number is for the twelve months until February 2019). That's a notable increase of 37% on last year. We think total compensation is more important but we note that the CEO salary is lower, at US$990k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$1.0b to US$3.2b. The median total CEO compensation was US$4.0m.
It would therefore appear that Steelcase Inc. pays Jim Keane more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration 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 Steelcase has changed over time.
Is Steelcase Inc. Growing?
Steelcase Inc. has reduced its earnings per share by an average of 17% a year, over the last three years (measured with a line of best fit). It achieved revenue growth of 14% over the last year.
Unfortunately, earnings per share have trended lower over the last 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. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. You might want to check this free visual report on analyst forecasts for future earnings.
Has Steelcase Inc. Been A Good Investment?
Steelcase Inc. has served shareholders reasonably well, with a total return of 27% over three years. But they would probably prefer not to see CEO compensation far in excess of the median.
We compared the total CEO remuneration paid by Steelcase Inc., and compared it to remuneration at a group of similar sized companies. We found that it pays well over the median amount paid in the benchmark group.
Neither earnings per share nor revenue have been growing sufficiently fast to impress us, over the last three years.
And shareholder returns are decent but not great. It's also worth noting total remuneration to the CEO has increased, year on year. So we doubt many shareholders would consider the CEO pay to be particularly modest! Shareholders may want to check for free if Steelcase insiders are buying or selling shares.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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 firstname.lastname@example.org. 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.