Here's Why Shareholders Will Not Be Complaining About Kadant Inc.'s (NYSE:KAI) CEO Pay Packet

Key Insights

• Kadant to hold its Annual General Meeting on 15th of May
• CEO Jeffrey Powell's total compensation includes salary of US$898.9k
• Total compensation is similar to the industry average
• Kadant's total shareholder return over the past three years was 68% while its EPS grew by 23% over the past three years

We have been pretty impressed with the performance at Kadant Inc. (NYSE:KAI) recently and CEO Jeffrey Powell deserves a mention for their role in it. The pleasing results would be something shareholders would keep in mind at the upcoming AGM on 15th of May. It is likely that the focus will be on company strategy going forward as shareholders hear from the board and cast their votes on resolutions such as executive remuneration and other matters. We think the CEO has done a pretty decent job and we discuss why the CEO compensation is appropriate.

Check out our latest analysis for Kadant

How Does Total Compensation For Jeffrey Powell Compare With Other Companies In The Industry?

Our data indicates that Kadant Inc. has a market capitalization of US$3.3b, and total annual CEO compensation was reported as US$6.0m for the year to December 2023. That's a notable increase of 22% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$899k.

On examining similar-sized companies in the American Machinery industry with market capitalizations between US$2.0b and US$6.4b, we discovered that the median CEO total compensation of that group was US$6.2m. This suggests that Kadant remunerates its CEO largely in line with the industry average. What's more, Jeffrey Powell holds US$17m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	US$899k	US$845k	15%
Other	US$5.1m	US$4.1m	85%
Total Compensation	US$6.0m	US$4.9m	100%

Speaking on an industry level, nearly 15% of total compensation represents salary, while the remainder of 85% is other remuneration. There isn't a significant difference between Kadant and the broader market, in terms of salary allocation in the overall compensation package. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Kadant Inc.'s Growth Numbers

Over the past three years, Kadant Inc. has seen its earnings per share (EPS) grow by 23% per year. In the last year, its revenue is up 7.6%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. 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 Kadant Inc. Been A Good Investment?

We think that the total shareholder return of 68%, over three years, would leave most Kadant Inc. shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

To Conclude...

The company's solid performance might have made most shareholders happy, possibly making CEO remuneration the least of the matters to be discussed in the AGM. However, investors will get the chance to engage on key strategic initiatives and future growth opportunities for the company and set their longer-term expectations.

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 1 warning sign for Kadant that investors should think about before committing capital to this stock.

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

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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.