Most Shareholders Will Probably Agree With McCormick & Company, Incorporated's (NYSE:MKC) CEO Compensation

Key Insights

• McCormick to hold its Annual General Meeting on 29th of March
• CEO Lawrence Kurzius' total compensation includes salary of US$1.25m
• The total compensation is similar to the average for the industry
• McCormick's total shareholder return over the past three years was 22% while its EPS was down 1.4% over the past three years

Despite positive share price growth of 22% for McCormick & Company, Incorporated (NYSE:MKC) over the last few years, earnings growth has been disappointing, which suggests something is amiss. The upcoming AGM on 29th of March may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.

Check out our latest analysis for McCormick

How Does Total Compensation For Lawrence Kurzius Compare With Other Companies In The Industry?

According to our data, McCormick & Company, Incorporated has a market capitalization of US$19b, and paid its CEO total annual compensation worth US$10m over the year to November 2022. Notably, that's a decrease of 18% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.3m.

On comparing similar companies in the American Food industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$12m. This suggests that McCormick remunerates its CEO largely in line with the industry average. What's more, Lawrence Kurzius holds US$36m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2022	2021	Proportion (2022)
Salary	US$1.3m	US$1.3m	12%
Other	US$9.2m	US$11m	88%
Total Compensation	US$10m	US$13m	100%

On an industry level, roughly 24% of total compensation represents salary and 76% is other remuneration. In McCormick's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

McCormick & Company, Incorporated's Growth

Over the last three years, McCormick & Company, Incorporated has shrunk its earnings per share by 1.4% per year. The trailing twelve months of revenue was pretty much the same as the prior period.

Its a bit disappointing to see that the company has failed to grow its EPS. And the flat revenue is seriously uninspiring. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has McCormick & Company, Incorporated Been A Good Investment?

McCormick & Company, Incorporated has served shareholders reasonably well, with a total return of 22% over three years. But they would probably prefer not to see CEO compensation far in excess of the median.

To Conclude...

While it's true that shareholders have owned decent returns, it's hard to overlook the lack of earnings growth and this makes us question whether these returns will continue. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We did our research and identified 2 warning signs (and 1 which is concerning) in McCormick we think you should know about.

Switching gears from McCormick, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.