Shareholders Will Most Likely Find Flowserve Corporation's (NYSE:FLS) CEO Compensation Acceptable

Key Insights

• Flowserve's Annual General Meeting to take place on 16th of May
• Total pay for CEO Robert Rowe includes US$1.20m salary
• The overall pay is comparable to the industry average
• Flowserve's total shareholder return over the past three years was 26% while its EPS grew by 21% over the past three years

Under the guidance of CEO Robert Rowe, Flowserve Corporation (NYSE:FLS) has performed reasonably well recently. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 16th of May. We present our case of why we think CEO compensation looks fair.

View our latest analysis for Flowserve

How Does Total Compensation For Robert Rowe Compare With Other Companies In The Industry?

According to our data, Flowserve Corporation has a market capitalization of US$6.4b, and paid its CEO total annual compensation worth US$11m over the year to December 2023. We note that's an increase of 22% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.2m.

On examining similar-sized companies in the American Machinery industry with market capitalizations between US$4.0b and US$12b, we discovered that the median CEO total compensation of that group was US$9.0m. This suggests that Flowserve remunerates its CEO largely in line with the industry average. Furthermore, Robert Rowe directly owns US$28m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	US$1.2m	US$1.2m	11%
Other	US$9.4m	US$7.5m	89%
Total Compensation	US$11m	US$8.7m	100%

On an industry level, roughly 15% of total compensation represents salary and 85% is other remuneration. Flowserve pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Flowserve Corporation's Growth

Flowserve Corporation has seen its earnings per share (EPS) increase by 21% a year over the past three years. In the last year, its revenue is up 17%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. 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 Flowserve Corporation Been A Good Investment?

Flowserve Corporation has served shareholders reasonably well, with a total return of 26% over three years. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

In Summary...

Given that the company's overall performance has been reasonable, the CEO remuneration policy might not be shareholders' central point of focus in the upcoming AGM. However, we still think that any proposed increase in CEO compensation will be examined closely to make sure the compensation is appropriate and linked to performance.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 2 warning signs for Flowserve that investors should look into moving forward.

Switching gears from Flowserve, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.