Most Shareholders Will Probably Find That The CEO Compensation For Donaldson Company, Inc. (NYSE:DCI) Is Reasonable

Performance at Donaldson Company, Inc. (NYSE:DCI) has been reasonably good and CEO Tod Carpenter has done a decent job of steering the company in the right direction. This is something shareholders will keep in mind as they cast their votes on company resolutions such as executive remuneration in the upcoming AGM on 18 November 2022. We present our case of why we think CEO compensation looks fair.

Our analysis indicates that DCI is potentially undervalued!

How Does Total Compensation For Tod Carpenter Compare With Other Companies In The Industry?

At the time of writing, our data shows that Donaldson Company, Inc. has a market capitalization of US$7.4b, and reported total annual CEO compensation of US$7.0m for the year to July 2022. That's mostly flat as compared to the prior year's compensation. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.0m.

On examining similar-sized companies in the industry with market capitalizations between US$4.0b and US$12b, we discovered that the median CEO total compensation of that group was US$9.3m. From this we gather that Tod Carpenter is paid around the median for CEOs in the industry. Moreover, Tod Carpenter also holds US$13m worth of Donaldson Company stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

On an industry level, around 15% of total compensation represents salary and 85% is other remuneration. Our data reveals that Donaldson Company allocates salary more or less in line with the wider market. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

Donaldson Company, Inc.'s Growth

Donaldson Company, Inc. has seen its earnings per share (EPS) increase by 9.3% a year over the past three years. In the last year, its revenue is up 16%.

This revenue growth could really point to a brighter future. And the improvement in EPSis modest but respectable. So while performance isn't amazing, we think it really does seem quite respectable. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Donaldson Company, Inc. Been A Good Investment?

Donaldson Company, Inc. has served shareholders reasonably well, with a total return of 15% over three years. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

To Conclude...

The company's decent performance might have made most shareholders happy, possibly making CEO remuneration the least of the concerns to be discussed in the upcoming AGM. Despite the pleasing results, we still think that any proposed increases to CEO compensation will be examined based on a case by case basis and linked to performance outcomes.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 2 warning signs for Donaldson Company that investors should think about before committing capital to this stock.

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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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.