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Marc Bitzer became the CEO of Whirlpool Corporation (NYSE:WHR) in 2017, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Whirlpool.
Comparing Whirlpool Corporation's CEO Compensation With the industry
Our data indicates that Whirlpool Corporation has a market capitalization of US$12b, and total annual CEO compensation was reported as US$14m for the year to December 2019. That's a notable increase of 18% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.3m.
For comparison, other companies in the industry with market capitalizations above US$8.0b, reported a median total CEO compensation of US$9.2m. Accordingly, our analysis reveals that Whirlpool Corporation pays Marc Bitzer north of the industry median. Furthermore, Marc Bitzer directly owns US$17m worth of shares in the company, implying that they are deeply invested in the company's success.
On an industry level, roughly 27% of total compensation represents salary and 73% is other remuneration. Whirlpool sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
A Look at Whirlpool Corporation's Growth Numbers
Whirlpool Corporation has seen its earnings per share (EPS) increase by 8.9% a year over the past three years. It saw its revenue drop 8.0% over the last year.
We would prefer it if there was revenue growth, but the modest EPSgrowth gives us some relief. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has Whirlpool Corporation Been A Good Investment?
Most shareholders would probably be pleased with Whirlpool Corporation for providing a total return of 35% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
As we touched on above, Whirlpool Corporation is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. But shareholder returns have been positive for the last three years. That's why we were hoping EPS growth would match this growth, but sadly that is not the case. We'd ideally want to see higher EPS growth, but CEO compensation seems to be within reason, given high shareholder returns.
CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 2 warning signs for Whirlpool that you should be aware of before investing.
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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