John Morikis became the CEO of The Sherwin-Williams Company (NYSE:SHW) in 2016. 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. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
How Does John Morikis's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that The Sherwin-Williams Company has a market cap of US$52b, and reported total annual CEO compensation of US$13m for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$1.3m. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We looked at a group of companies with market capitalizations over US$8.0b and the median CEO total compensation was US$11m. There aren't very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.
So John Morikis 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 a visual representation of the CEO compensation at Sherwin-Williams, below.
Is The Sherwin-Williams Company Growing?
The Sherwin-Williams Company has increased its earnings per share (EPS) by an average of 4.1% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 2.3%.
I'd prefer higher revenue growth, but it is good to see modest EPS growth. Considering these factors I'd say performance has been pretty decent, though not amazing. Shareholders might be interested in this free visualization of analyst forecasts.
Has The Sherwin-Williams Company Been A Good Investment?
I think that the total shareholder return of 122%, over three years, would leave most The Sherwin-Williams Company shareholders smiling. 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.
John Morikis is paid around the same as most CEOs of large companies.
While the growth could be better, the shareholder returns are clearly good. So we can conclude that on this analysis the CEO compensation seems pretty sound. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Sherwin-Williams (free visualization of insider trades).
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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