Is Kaman Corporation (NYSE:KAMN) Excessively Paying Its CEO?

In 2008, Neal Keating was appointed CEO of Kaman Corporation (NYSE:KAMN). First, this article will compare CEO compensation with compensation at similar sized companies. 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 Kaman

How Does Neal Keating's Compensation Compare With Similar Sized Companies?

Our data indicates that Kaman Corporation is worth US$944m, and total annual CEO compensation was reported as US$3.9m for the year to December 2019. That's actually a decrease on the year before. While we always look at total compensation first, we note that the salary component is less, at US$1.0m. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. When we examined a selection of companies with market caps ranging from US$400m to US$1.6b, we found the median CEO total compensation was US$3.3m.

Now let's take a look at the pay mix on an industry and company level to gain a better understanding of where Kaman stands. On an industry level, roughly 22% of total compensation represents salary and 78% is other remuneration. So it seems like there isn't a significant difference between Kaman and the broader market, in terms of salary allocation in the overall compensation package.

So Neal Keating 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 Kaman has changed from year to year.

Is Kaman Corporation Growing?

Kaman Corporation has seen earnings per share (EPS) move positively by an average of 2.2% a year, over the last three years (using a line of best fit). Its revenue is up 3.5% over last year.

I'd prefer higher revenue growth, but it is good to see modest EPS growth. Considering these factors I'd say performance has been pretty decent, though not amazing. It could be important to check this free visual depiction of what analysts expect for the future.

Has Kaman Corporation Been A Good Investment?

With a three year total loss of 26%, Kaman Corporation would certainly have some dissatisfied shareholders. So shareholders would probably think the company shouldn't be too generous with CEO compensation.

In Summary...

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

We would like to see somewhat stronger per share growth. And shareholder returns have been disappointing over the last three years. So it would take a bold person to suggest the pay is too modest. Looking into other areas, we've picked out 2 warning signs for Kaman that investors should think about before committing capital to this stock.

Important note: Kaman may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.

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.

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