Is Sanderson Farms, Inc.’s (NASDAQ:SAFM) CEO Being Overpaid?

Joe Sanderson has been the CEO of Sanderson Farms, Inc. (NASDAQ:SAFM) since 1989. 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 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.

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How Does Joe Sanderson’s Compensation Compare With Similar Sized Companies?

According to our data, Sanderson Farms, Inc. has a market capitalization of US$2.7b, and pays its CEO total annual compensation worth US$4.2m. (This number is for the twelve months until 2018). That’s below the compensation, last year. While we always look at total compensation first, we note that the salary component is less, at US$1.5m. We examined companies with market caps from US$2.0b to US$6.4b, and discovered that the median CEO compensation of that group was US$4.9m.

That means Joe Sanderson receives fairly typical remuneration for the CEO of a company that size. While this data point isn’t particularly informative alone, it gains more meaning when considered with business performance. So this free report on the analyst consensus forecasts could help you make a master move on this stock.

You can see, below, how CEO compensation at Sanderson Farms has changed over time.

NasdaqGS:SAFM CEO Compensation January 21st 19
NasdaqGS:SAFM CEO Compensation January 21st 19

Is Sanderson Farms, Inc. Growing?

Over the last three years Sanderson Farms, Inc. has grown its earnings per share (EPS) by an average of 5.0% per year (using a line of best fit). In the last year, its revenue is down -3.2%.

I would argue that the lack of revenue growth in the last year is less than ideal, but I’m happy with the EPS growth. It’s hard to reach a conclusion about business performance right now. This may be one to watch.

Has Sanderson Farms, Inc. Been A Good Investment?

Most shareholders would probably be pleased with Sanderson Farms, Inc. for providing a total return of 63% over three years. 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.

In Summary…

Joe Sanderson is paid around what is normal the leaders of comparable size companies.

The company isn’t showing particularly great growth, but shareholder returns have been pleasing. So all things considered I’d venture that the CEO pay is appropriate. Shareholders may want to check for free if Sanderson Farms insiders are buying or selling shares.

If you want to buy a stock that is better than Sanderson Farms, this free list of high return, low debt companies is a great place to look.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.