We think CTS Corporation's (NYSE:CTS) CEO May Struggle To See Much Of A Pay Rise This Year
Under the guidance of CEO Kieran O'Sullivan, CTS Corporation (NYSE:CTS) has performed reasonably well recently. This is something shareholders will keep in mind as they cast their votes on company resolutions such as executive remuneration in the upcoming AGM on 13 May 2021. We present our case of why we think CEO compensation looks fair.
See our latest analysis for CTS
Comparing CTS Corporation's CEO Compensation With the industry
According to our data, CTS Corporation has a market capitalization of US$1.0b, and paid its CEO total annual compensation worth US$2.5m over the year to December 2020. That is, the compensation was roughly the same as last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$722k.
For comparison, other companies in the same industry with market capitalizations ranging between US$400m and US$1.6b had a median total CEO compensation of US$2.6m. So it looks like CTS compensates Kieran O'Sullivan in line with the median for the industry. Moreover, Kieran O'Sullivan also holds US$12m worth of CTS stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Component | 2020 | 2019 | Proportion (2020) |
Salary | US$722k | US$750k | 29% |
Other | US$1.8m | US$1.7m | 71% |
Total Compensation | US$2.5m | US$2.4m | 100% |
Talking in terms of the industry, salary represented approximately 27% of total compensation out of all the companies we analyzed, while other remuneration made up 73% of the pie. There isn't a significant difference between CTS and the broader market, in terms of salary allocation in the overall compensation package. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
CTS Corporation's Growth
CTS Corporation's earnings per share (EPS) grew 36% per year over the last three years. In the last year, its revenue is down 1.1%.
This demonstrates that the company has been improving recently and is good news for the shareholders. It's always a tough situation when revenues are not growing, but ultimately profits are more important. 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 CTS Corporation Been A Good Investment?
With a total shareholder return of 4.2% over three years, CTS Corporation has done okay by shareholders, but there's always room for improvement. As a result, investors in the company might be reluctant about agreeing to increase CEO pay in the future, before seeing an improvement on their returns.
In Summary...
Given that the company's overall performance has been reasonable, the CEO remuneration policy might not be shareholders' central point of focus in the upcoming AGM. However, we still think that any proposed increase in CEO compensation will be examined closely to make sure the compensation is appropriate and linked to performance.
So you may want to check if insiders are buying CTS shares with their own money (free access).
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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