In 2014 Jim Keane was appointed CEO of Steelcase Inc. (NYSE:SCS). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. 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.
How Does Jim Keane’s Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Steelcase Inc. has a market cap of US$2.0b, and reported total annual CEO compensation of US$6.4m for the year to February 2019. While we always look at total compensation first, we note that the salary component is less, at US$990k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. We examined companies with market caps from US$1.0b to US$3.2b, and discovered that the median CEO total compensation of that group was US$4.1m.
It would therefore appear that Steelcase Inc. pays Jim Keane more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn’t mean the remuneration is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.
You can see, below, how CEO compensation at Steelcase has changed over time.
Is Steelcase Inc. Growing?
Steelcase Inc. has reduced its earnings per share by an average of 9.7% a year, over the last three years (measured with a line of best fit). It achieved revenue growth of 15% over the last year.
Few shareholders would be pleased to read that earnings per share are lower over three years. There’s no doubt that the silver lining is that revenue is up. But it isn’t sufficiently fast growth to overlook the fact that earnings per share has gone backwards over three years. It’s hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Shareholders might be interested in this free visualization of analyst forecasts.
Has Steelcase Inc. Been A Good Investment?
Most shareholders would probably be pleased with Steelcase Inc. for providing a total return of 42% 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.
We compared total CEO remuneration at Steelcase Inc. with the amount paid at companies with a similar market capitalization. Our data suggests that it pays above the median CEO pay within that group.
Neither earnings per share nor revenue have been growing sufficiently to impress us, over the last three years. However, we can’t argue with the strong returns to shareholders, over the same time period. Considering this, shareholders are probably not too worried about the CEO compensation. So you may want to check if insiders are buying Steelcase shares with their own money (free access).
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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