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TE Connectivity Ltd. (NYSE:TEL) has exhibited strong share price growth in the past few years. However, its earnings growth has not kept up, suggesting that there may be something amiss. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 10 March 2021. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.
Comparing TE Connectivity Ltd.'s CEO Compensation With the industry
Our data indicates that TE Connectivity Ltd. has a market capitalization of US$43b, and total annual CEO compensation was reported as US$11m for the year to September 2020. We note that's an increase of 14% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.2m.
In comparison with other companies in the industry with market capitalizations over US$8.0b , the reported median total CEO compensation was US$9.0m. This suggests that TE Connectivity remunerates its CEO largely in line with the industry average. Furthermore, Terrence Curtin directly owns US$12m worth of shares in the company, implying that they are deeply invested in the company's success.
Speaking on an industry level, nearly 33% of total compensation represents salary, while the remainder of 67% is other remuneration. TE Connectivity sets aside a smaller share of compensation for salary, in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
A Look at TE Connectivity Ltd.'s Growth Numbers
Over the last three years, TE Connectivity Ltd. has shrunk its earnings per share by 55% per year. It saw its revenue drop 5.6% over the last year.
Few shareholders would be pleased to read that EPS have declined. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has TE Connectivity Ltd. Been A Good Investment?
We think that the total shareholder return of 36%, over three years, would leave most TE Connectivity Ltd. shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
While the return to shareholders does look promising, it's hard to ignore the lack of earnings growth and this makes us question whether these strong returns will continue. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 4 warning signs for TE Connectivity that investors should be aware of in a dynamic business environment.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.
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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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