Why We Think Tempur Sealy International, Inc.'s (NYSE:TPX) CEO Compensation Is Not Excessive At All

Key Insights

• Tempur Sealy International's Annual General Meeting to take place on 9th of May
• CEO Scott Thompson's total compensation includes salary of US$1.13m
• Total compensation is similar to the industry average
• Tempur Sealy International's total shareholder return over the past three years was 35% while its EPS grew by 8.1% over the past three years

CEO Scott Thompson has done a decent job of delivering relatively good performance at Tempur Sealy International, Inc. (NYSE:TPX) recently. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 9th of May. We present our case of why we think CEO compensation looks fair.

Check out our latest analysis for Tempur Sealy International

How Does Total Compensation For Scott Thompson Compare With Other Companies In The Industry?

According to our data, Tempur Sealy International, Inc. has a market capitalization of US$8.7b, and paid its CEO total annual compensation worth US$12m over the year to December 2023. We note that's a decrease of 40% compared to last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.1m.

For comparison, other companies in the American Consumer Durables industry with market capitalizations ranging between US$4.0b and US$12b had a median total CEO compensation of US$11m. This suggests that Tempur Sealy International remunerates its CEO largely in line with the industry average. Furthermore, Scott Thompson directly owns US$130m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	US$1.1m	US$1.1m	10%
Other	US$11m	US$19m	90%
Total Compensation	US$12m	US$20m	100%

On an industry level, around 18% of total compensation represents salary and 82% is other remuneration. In Tempur Sealy International's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at Tempur Sealy International, Inc.'s Growth Numbers

Tempur Sealy International, Inc.'s earnings per share (EPS) grew 8.1% per year over the last three years. Revenue was pretty flat on last year.

We're not particularly impressed by the revenue growth, but it is good to see modest EPS growth. So there are some positives here, but not enough to earn high praise. 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 Tempur Sealy International, Inc. Been A Good Investment?

We think that the total shareholder return of 35%, over three years, would leave most Tempur Sealy International, Inc. shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar 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. 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. That's why we did some digging and identified 2 warning signs for Tempur Sealy International that you should be aware of before investing.

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.