Is Franklin Electric Co., Inc. (NASDAQ:FELE) Overpaying Its CEO?

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In 2014 Gregg Sengstack was appointed CEO of Franklin Electric Co., Inc. (NASDAQ:FELE). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we’ll look at a snap shot of the business growth. 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.

See our latest analysis for Franklin Electric

How Does Gregg Sengstack’s Compensation Compare With Similar Sized Companies?

Our data indicates that Franklin Electric Co., Inc. is worth US$2.1b, and total annual CEO compensation is US$5.1m. (This number is for the twelve months until December 2018). That’s a modest increase of 6.1% on the prior year year. We think total compensation is more important but we note that the CEO salary is lower, at US$765k. When we examined a selection of companies with market caps ranging from US$1.0b to US$3.2b, we found the median CEO total compensation was US$4.1m.

So Gregg Sengstack is paid around the average of the companies we looked at. While this data point isn’t particularly informative alone, it gains more meaning when considered with business performance.

The graphic below shows how CEO compensation at Franklin Electric has changed from year to year.

NasdaqGS:FELE CEO Compensation, June 5th 2019
NasdaqGS:FELE CEO Compensation, June 5th 2019

Is Franklin Electric Co., Inc. Growing?

Over the last three years Franklin Electric Co., Inc. has grown its earnings per share (EPS) by an average of 11% per year (using a line of best fit). In the last year, its revenue is up 7.7%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It’s also good to see modest revenue growth, suggesting the underlying business is healthy. Shareholders might be interested in this free visualization of analyst forecasts.

Has Franklin Electric Co., Inc. Been A Good Investment?

I think that the total shareholder return of 34%, over three years, would leave most Franklin Electric Co., Inc. shareholders smiling. 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.

In Summary…

Remuneration for Gregg Sengstack is close enough to the median pay for a CEO of a similar sized company .

The company is growing earnings per share and total shareholder returns have been pleasing. Indeed, many might consider the pay rather modest, given the solid company performance! Whatever your view on compensation, you might want to check if insiders are buying or selling Franklin Electric shares (free trial).

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Thank you for reading.