Is TE Connectivity Ltd.'s (NYSE:TEL) CEO Overpaid Relative To Its Peers?
Terrence Curtin has been the CEO of TE Connectivity Ltd. (NYSE:TEL) since 2017. 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.
See our latest analysis for TE Connectivity
How Does Terrence Curtin's Compensation Compare With Similar Sized Companies?
According to our data, TE Connectivity Ltd. has a market capitalization of US$24b, and paid its CEO total annual compensation worth US$9.3m over the year to September 2019. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$1.2m. 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 over US$8.0b and the median CEO total compensation was US$12m. (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).
Pay mix tells us a lot about how a company functions versus the wider industry, and it's no different in the case of TE Connectivity. Talking in terms of the sector, salary represented approximately 35% of total compensation out of all the companies we analysed, while other remuneration made up 65% of the pie. Non-salary compensation represents a greater slice of the remuneration pie for TE Connectivity, in sharp contrast to the overall sector.
So Terrence Curtin receives a similar amount to the median CEO pay, amongst the companies we looked at. This doesn't tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context. You can see, below, how CEO compensation at TE Connectivity has changed over time.
Is TE Connectivity Ltd. Growing?
On average over the last three years, TE Connectivity Ltd. has seen earnings per share (EPS) move in a favourable direction by 16% each year (using a line of best fit). In the last year, its revenue is down 5.2%.
This demonstrates that the company has been improving recently. A good result. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Shareholders might be interested in this free visualization of analyst forecasts.
Has TE Connectivity Ltd. Been A Good Investment?
TE Connectivity Ltd. has not done too badly by shareholders, with a total return of 3.8%, over three years. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
In Summary...
Remuneration for Terrence Curtin is close enough to the median pay for a CEO of a large company .
The company is growing EPS but shareholder returns have been sound but not amazing. As a result of these considerations, I would suggest the CEO pay is reasonable. Shifting gears from CEO pay for a second, we've picked out 3 warning signs for TE Connectivity that investors should be aware of in a dynamic business environment.
Important note: TE Connectivity may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE 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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