In 2008 George Freeman was appointed CEO of Universal Corporation (NYSE:UVV). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does George Freeman’s Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Universal Corporation has a market cap of US$1.4b, and reported total annual CEO compensation of US$5.3m for the year to March 2019. We think total compensation is more important but we note that the CEO salary is lower, at US$918k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. 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$3.9m.
Thus we can conclude that George Freeman receives more in total compensation than the median of a group of companies in the same market, and of similar size to Universal Corporation. However, this doesn’t necessarily mean the pay 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 Universal has changed over time.
Is Universal Corporation Growing?
On average over the last three years, Universal Corporation has grown earnings per share (EPS) by 14% each year (using a line of best fit). It saw its revenue drop 4.6% over the last year.
This demonstrates that the company has been improving recently. A good result. Revenue growth is a real positive for growth, but ultimately profits are more important. We don’t have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has Universal Corporation Been A Good Investment?
Universal Corporation has generated a total shareholder return of 1.0% over three years, so most shareholders wouldn’t be too disappointed. But they would probably prefer not to see CEO compensation far in excess of the median.
We compared the total CEO remuneration paid by Universal Corporation, and compared it to remuneration at a group of similar sized companies. We found that it pays well over the median amount paid in the benchmark group.
Importantly, though, the company has impressed with its earnings per share growth, over three years. We also think investors are doing ok, over the same time period. So, considering the EPS growth we do not wish to criticize the level of CEO compensation, though we’d recommend further research on management. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Universal (free visualization of insider trades).
If you want to buy a stock that is better than Universal, this free list of high return, low debt companies is a great place to look.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned.
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