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F. Stepan has been the CEO of Stepan Company (NYSE:SCL) since 2006. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we'll consider growth that the business demonstrates. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does F. Stepan's Compensation Compare With Similar Sized Companies?
Our data indicates that Stepan Company is worth US$2.0b, and total annual CEO compensation is US$3.7m. (This figure is for the year to December 2018). That's just a smallish increase of 0.6% on last year. We think total compensation is more important but we note that the CEO salary is lower, at US$925k. 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$3.8m.
That means F. Stepan receives fairly typical remuneration for the CEO of a company that size. Although this fact alone doesn't tell us a great deal, it becomes more relevant when considered against the business performance.
The graphic below shows how CEO compensation at Stepan has changed from year to year.
Is Stepan Company Growing?
Over the last three years Stepan Company has grown its earnings per share (EPS) by an average of 6.1% per year (using a line of best fit). It achieved revenue growth of 1.4% over the last year.
I'd prefer higher revenue growth, but it is good to see modest EPS growth. Considering these factors I'd say performance has been pretty decent, though not amazing. You might want to check this free visual report on analyst forecasts for future earnings.
Has Stepan Company Been A Good Investment?
I think that the total shareholder return of 50%, over three years, would leave most Stepan Company shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
F. Stepan is paid around the same as most CEOs of similar size companies.
The company isn't showing particularly great growth, but shareholder returns have been pleasing. So all things considered I'd venture that the CEO pay is appropriate. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Stepan.
If you want to buy a stock that is better than Stepan, this free list of high return, low debt companies is a great place to look.
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