Tim Donahue became the CEO of Crown Holdings, Inc. (NYSE:CCK) in 2016. First, this article will compare CEO compensation with compensation at similar sized companies. Next, we’ll consider growth that the business demonstrates. 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.
How Does Tim Donahue’s Compensation Compare With Similar Sized Companies?
According to our data, Crown Holdings, Inc. has a market capitalization of US$9.3b, and paid its CEO total annual compensation worth US$9.8m over the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$1.1m. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. When we examined a selection of companies with market caps ranging from US$4.0b to US$12b, we found the median CEO total compensation was US$6.8m.
Thus we can conclude that Tim Donahue receives more in total compensation than the median of a group of companies in the same market, and of similar size to Crown Holdings, Inc.. However, this doesn’t necessarily mean the pay is too high. 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 Crown Holdings has changed over time.
Is Crown Holdings, Inc. Growing?
Crown Holdings, Inc. has reduced its earnings per share by an average of 4.1% a year, over the last three years (measured with a line of best fit). Its revenue is up 9.7% over last year.
Sadly for shareholders, earnings per share are actually down, over three years. The fairly low revenue growth fails to impress given that the earnings per share is down. It’s hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Shareholders might be interested in this free visualization of analyst forecasts.
Has Crown Holdings, Inc. Been A Good Investment?
With a total shareholder return of 28% over three years, Crown Holdings, Inc. shareholders would, in general, be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.
We examined the amount Crown Holdings, Inc. pays its CEO, and compared it to the amount paid by similar sized companies. We found that it pays well over the median amount paid in the benchmark group.
We think many shareholders would be underwhelmed with the business growth over the last three years. While shareholder returns are acceptable, they don’t delight. So we think more research is needed, but we don’t think the CEO underpaid. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Crown Holdings.
Important note: Crown Holdings 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.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.