In 2016 Jim Loree was appointed CEO of Stanley Black & Decker, Inc. (NYSE:SWK). This analysis aims first to contrast CEO compensation with other large companies. Then we’ll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Jim Loree’s Compensation Compare With Similar Sized Companies?
Our data indicates that Stanley Black & Decker, Inc. is worth US$22b, and total annual CEO compensation is US$14m. (This number is for the twelve months until December 2018). 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$1.3m. We looked at a group of companies with market capitalizations over US$8.0b and the median CEO total compensation was US$11m. There aren’t very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.
So Jim Loree is paid around the average of the companies we looked at. Although this fact alone doesn’t tell us a great deal, it becomes more relevant when considered against the business performance.
You can see, below, how CEO compensation at Stanley Black & Decker has changed over time.
Is Stanley Black & Decker, Inc. Growing?
Stanley Black & Decker, Inc. has reduced its earnings per share by an average of 2.1% a year, over the last three years (measured with a line of best fit). It achieved revenue growth of 7.9% over the last year.
The lack of earnings per share growth in the last three years is unimpressive. And the modest revenue growth over 12 months isn’t much comfort against the reduced earnings per share. These factors suggest that the business performance wouldn’t really justify a high pay packet for the CEO. You might want to check this free visual report on analyst forecasts for future earnings.
Has Stanley Black & Decker, Inc. Been A Good Investment?
Boasting a total shareholder return of 42% over three years, Stanley Black & Decker, Inc. has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
Jim Loree is paid around the same as most CEOs of large companies.
The company isn’t growing earnings per share, but shareholder returns have been strong over the last three years. So we doubt many are complaining about the fairly normal CEO pay. So you may want to check if insiders are buying Stanley Black & Decker shares with their own money (free access).
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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If you spot an error that warrants correction, please contact the editor at email@example.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.