Is The J. M. Smucker Company (NYSE:SJM) Excessively Paying Its CEO?

Mark Smucker has been the CEO of The J. M. Smucker Company (NYSE:SJM) since 2016. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. Next, we’ll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.

Check out our latest analysis for J. M. Smucker

How Does Mark Smucker’s Compensation Compare With Similar Sized Companies?

Our data indicates that The J. M. Smucker Company is worth US$12b, and total annual CEO compensation is US$6.7m. (This figure is for the year to April 2018). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$934k. We looked at a group of companies with market capitalizations over US$8.0b and the median CEO compensation was US$11m. Once you start looking at very large companies, you need to take a broader range, because there simply aren’t that many of them.

This would give shareholders a good impression of the company, since most large companies pay more, leaving less for shareholders. However, before we heap on the praise, we should delve deeper to understand business performance.

The graphic below shows how CEO compensation at J. M. Smucker has changed from year to year.

NYSE:SJM CEO Compensation, March 8th 2019
NYSE:SJM CEO Compensation, March 8th 2019

Is The J. M. Smucker Company Growing?

Over the last three years The J. M. Smucker Company has grown its earnings per share (EPS) by an average of 28% per year (using a line of best fit). Its revenue is up 4.9% over last year.

This demonstrates that the company has been improving recently. A good result. It’s good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. You might want to check this free visual report on analyst forecasts for future earnings.

Has The J. M. Smucker Company Been A Good Investment?

Since shareholders would have lost about 14% over three years, some The J. M. Smucker Company shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary…

The J. M. Smucker Company is currently paying its CEO below what is normal for large companies. Considering the underlying business is growing earnings, this would suggest the pay is modest. Despite some positives, it is likely that shareholders wanted better returns, given the performance over the last three years. So while we would not say that Mark Smucker is generously paid, it would be good to see an improvement in business performance before too an increase in pay.

When I see fairly low remuneration, combined with earnings per share growth, but without big share price gains, it makes me want to research the potential for future gains. So you may want to check if insiders are buying J. M. Smucker shares with their own money (free access).

Important note: J. M. Smucker 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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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. Thank you for reading.