F. Stepan has been the CEO of Stepan Company (NYSE:SCL) since 2006. 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 we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.
How Does F. Stepan’s Compensation Compare With Similar Sized Companies?
Our data indicates that Stepan Company is worth US$2.2b, and total annual CEO compensation was reported as US$3.7m for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$925k. 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$4.1m.
So F. Stepan receives a similar amount to the median CEO pay, amongst the companies we looked at. While this data point isn’t particularly informative alone, it gains more meaning when considered with business performance.
You can see a visual representation of the CEO compensation at Stepan, below.
Is Stepan Company Growing?
On average over the last three years, Stepan Company has grown earnings per share (EPS) by 5.8% each year (using a line of best fit). In the last year, its revenue is down -2.2%.
I would prefer it if there was revenue growth, but the improvement in EPS is good. It’s hard to reach a conclusion about business performance right now. This may be one to watch.
Has Stepan Company Been A Good Investment?
Boasting a total shareholder return of 43% over three years, Stepan Company has done well by shareholders. 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.
F. Stepan is paid around what is normal the leaders of comparable size companies.
The company isn’t showing particularly great growth, but shareholder returns have been pleasing. So considering most shareholders would be happy, we’d say the CEO pay is appropriate. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Stepan.
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.
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