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George Freeman became the CEO of Universal Corporation (NYSE:UVV) in 2008. First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. 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.
How Does George Freeman’s Compensation Compare With Similar Sized Companies?
According to our data, Universal Corporation has a market capitalization of US$1.4b, and pays its CEO total annual compensation worth US$3.7m. (This number is for the twelve months until 2018). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$900k. When we examined a selection of companies with market caps ranging from US$1.0b to US$3.2b, we found the median CEO compensation was US$3.5m.
That means George Freeman 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.
You can see, below, how CEO compensation at Universal has changed over time.
Is Universal Corporation Growing?
Universal Corporation saw earnings per share stay pretty flat over the last three years, albeit with a slight decrease, according to the line of best fit. In the last year, its revenue is up 4.2%.
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. It’s hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don’t have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Universal Corporation Been A Good Investment?
Universal Corporation has generated a total shareholder return of 16% over three years, so most shareholders would be reasonably content. But they probably don’t want to see the CEO paid more than is normal for companies around the same size.
George Freeman is paid around what is normal the leaders of comparable size companies.
We’re not seeing great strides in earnings per share, and total returns were decent but not amazing in the last three years. We wouldn’t say the CEO pay is too high, but it’s probably fair to say that many shareholders would like to see improved performance, before any pay rise occurs. Whatever your view on compensation, you might want to check if insiders are buying or selling Universal shares (free trial).
Important note: Universal 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.
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 firstname.lastname@example.org.