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Is STERIS plc's (NYSE:STE) CEO Salary Justified?

Simply Wall St

Walt Rosebrough became the CEO of STERIS plc (NYSE:STE) in 2007. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. Next, we'll consider growth that the business demonstrates. 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.

View our latest analysis for STERIS

How Does Walt Rosebrough's Compensation Compare With Similar Sized Companies?

According to our data, STERIS plc has a market capitalization of US$13b, and paid its CEO total annual compensation worth US$6.0m over the year to March 2019. We think total compensation is more important but we note that the CEO salary is lower, at US$880k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. When we examined a group of companies with market caps over US$8.0b, we found that their median CEO total compensation was US$11m. Once you start looking at very large companies, you need to take a broader range, because there simply aren't that many of them.

A first glance this seems like a real positive for shareholders, since Walt Rosebrough is paid less than the average total compensation paid by other large companies. However, before we heap on the praise, we should delve deeper to understand business performance.

The graphic below shows how CEO compensation at STERIS has changed from year to year.

NYSE:STE CEO Compensation, December 13th 2019
NYSE:STE CEO Compensation, December 13th 2019

Is STERIS plc Growing?

On average over the last three years, STERIS plc has grown earnings per share (EPS) by 33% each year (using a line of best fit). In the last year, its revenue is up 7.5%.

This demonstrates that the company has been improving recently. A good result. It's also good to see modest revenue growth, suggesting the underlying business is healthy. Shareholders might be interested in this free visualization of analyst forecasts.

Has STERIS plc Been A Good Investment?

Boasting a total shareholder return of 131% over three years, STERIS plc has done well by shareholders. 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...

It looks like STERIS plc pays its CEO less than the average at large companies.

Considering the underlying business is growing earnings, this would suggest the pay is modest. The pleasing shareholder returns are the cherry on top; you might even consider that Walt Rosebrough deserves a raise! It is relatively rare to see a modestly paid CEO when performance is so impressive. But it is even better if company insiders are also buying shares with their own money. Whatever your view on compensation, you might want to check if insiders are buying or selling STERIS shares (free trial).

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.

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. Thank you for reading.