Is Avery Dennison Corporation (NYSE:AVY) Excessively Paying Its CEO?

Mitch Butier became the CEO of Avery Dennison Corporation (NYSE:AVY) in 2016. 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 – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.

Check out our latest analysis for Avery Dennison

How Does Mitch Butier’s Compensation Compare With Similar Sized Companies?

According to our data, Avery Dennison Corporation has a market capitalization of US$9.1b, and pays its CEO total annual compensation worth US$9.0m. (This figure is for the year to December 2017). We think total compensation is more important but we note that the CEO salary is lower, at US$1.1m. We examined companies with market caps from US$4.0b to US$12b, and discovered that the median CEO compensation of that group was US$6.2m.

As you can see, Mitch Butier is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Avery Dennison Corporation is paying too much. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

You can see, below, how CEO compensation at Avery Dennison has changed over time.

NYSE:AVY CEO Compensation, March 6th 2019
NYSE:AVY CEO Compensation, March 6th 2019

Is Avery Dennison Corporation Growing?

Over the last three years Avery Dennison Corporation has grown its earnings per share (EPS) by an average of 8.1% per year (using a line of best fit). It achieved revenue growth of 8.3% over the last year.

I’d prefer higher revenue growth, but I’m happy with the modest EPS growth. It’s clear the performance has been quite decent, but it it falls short of outstanding,based on this information. It could be important to check this free visual depiction of what analysts expect for the future.

Has Avery Dennison Corporation Been A Good Investment?

I think that the total shareholder return of 69%, over three years, would leave most Avery Dennison Corporation shareholders smiling. 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…

We examined the amount Avery Dennison Corporation pays its CEO, and compared it to the amount paid by similar sized companies. Our data suggests that it pays above the median CEO pay within that group.

While we generally prefer to see stronger EPS growth, there’s no arguing with the strong returns to shareholders, over the last three years. Considering this fine result for investors, we daresay the CEO compensation might be apt. So you may want to check if insiders are buying Avery Dennison shares with their own money (free access).

Important note: Avery Dennison 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.