Stock Analysis

Increases to Baxter International Inc.'s (NYSE:BAX) CEO Compensation Might Cool off for now

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Performance at Baxter International Inc. (NYSE:BAX) has been reasonably good and CEO Joe Almeida has done a decent job of steering the company in the right direction. As shareholders go into the upcoming AGM on 04 May 2021, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. However, some shareholders may still be hesitant of being overly generous with CEO compensation.

View our latest analysis for Baxter International

How Does Total Compensation For Joe Almeida Compare With Other Companies In The Industry?

According to our data, Baxter International Inc. has a market capitalization of US$44b, and paid its CEO total annual compensation worth US$16m over the year to December 2020. We note that's an increase of 14% above last year. 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 industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$10m. This suggests that Joe Almeida is paid more than the median for the industry. What's more, Joe Almeida holds US$10m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component20202019Proportion (2020)
Salary US$1.3m US$1.3m 8%
Other US$15m US$13m 92%
Total CompensationUS$16m US$14m100%

Talking in terms of the industry, salary represented approximately 19% of total compensation out of all the companies we analyzed, while other remuneration made up 81% of the pie. In Baxter International's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

NYSE:BAX CEO Compensation April 28th 2021

Baxter International Inc.'s Growth

Baxter International Inc. has seen its earnings per share (EPS) increase by 25% a year over the past three years. In the last year, its revenue is up 2.7%.

Shareholders would be glad to know that the company has improved itself over the last few years. It's nice to see revenue heading northwards, as this is consistent with healthy business conditions. 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 Baxter International Inc. Been A Good Investment?

Baxter International Inc. has generated a total shareholder return of 28% 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.

In Summary...

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, if the board proposes to increase the compensation, some shareholders might have questions given that the CEO is already being paid higher than the industry.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 2 warning signs for Baxter International that investors should think about before committing capital to this stock.

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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