This article will reflect on the compensation paid to Tony Thene who has served as CEO of Carpenter Technology Corporation (NYSE:CRS) since 2015. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Carpenter Technology.
How Does Total Compensation For Tony Thene Compare With Other Companies In The Industry?
Our data indicates that Carpenter Technology Corporation has a market capitalization of US$1.4b, and total annual CEO compensation was reported as US$4.1m for the year to June 2020. That's a notable decrease of 13% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$897k.
For comparison, other companies in the same industry with market capitalizations ranging between US$1.0b and US$3.2b had a median total CEO compensation of US$4.1m. This suggests that Carpenter Technology remunerates its CEO largely in line with the industry average. Furthermore, Tony Thene directly owns US$6.3m worth of shares in the company, implying that they are deeply invested in the company's success.
Talking in terms of the industry, salary represented approximately 36% of total compensation out of all the companies we analyzed, while other remuneration made up 64% of the pie. Carpenter Technology sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
Carpenter Technology Corporation's Growth
Over the last three years, Carpenter Technology Corporation has shrunk its earnings per share by 29% per year. It saw its revenue drop 19% over the last year.
Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has Carpenter Technology Corporation Been A Good Investment?
Since shareholders would have lost about 40% over three years, some Carpenter Technology Corporation investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
As we noted earlier, Carpenter Technology pays its CEO in line with similar-sized companies belonging to the same industry. Meanwhile, EPS growth and shareholder returns have been in the red for the last three years. We'd stop short of saying compensation is inappropriate, but we would understand if shareholders had questions regarding a future raise.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 3 warning signs for Carpenter Technology (1 shouldn't be ignored!) that you should be aware of before investing here.
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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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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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