Graphic Packaging Holding Company's (NYSE:GPK) CEO Compensation Looks Acceptable To Us And Here's Why

By
Simply Wall St
Published
May 19, 2021
NYSE:GPK
Source: Shutterstock

The share price of Graphic Packaging Holding Company (NYSE:GPK) has been growing in the past few years, however, the per-share earnings growth has been lacking, suggesting something is amiss. Some of these issues will occupy shareholders' minds as the AGM rolls around on 26 May 2021. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.

Check out our latest analysis for Graphic Packaging Holding

How Does Total Compensation For Mike Doss Compare With Other Companies In The Industry?

Our data indicates that Graphic Packaging Holding Company has a market capitalization of US$5.3b, and total annual CEO compensation was reported as US$8.0m for the year to December 2020. That's a notable decrease of 13% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.1m.

On examining similar-sized companies in the industry with market capitalizations between US$4.0b and US$12b, we discovered that the median CEO total compensation of that group was US$7.0m. So it looks like Graphic Packaging Holding compensates Mike Doss in line with the median for the industry. Moreover, Mike Doss also holds US$25m worth of Graphic Packaging Holding stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20202019Proportion (2020)
Salary US$1.1m US$1.1m 14%
Other US$6.9m US$8.1m 86%
Total CompensationUS$8.0m US$9.2m100%

Talking in terms of the industry, salary represented approximately 13% of total compensation out of all the companies we analyzed, while other remuneration made up 87% of the pie. There isn't a significant difference between Graphic Packaging Holding and the broader market, in terms of salary allocation in the overall compensation package. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

ceo-compensation
NYSE:GPK CEO Compensation May 20th 2021

A Look at Graphic Packaging Holding Company's Growth Numbers

Graphic Packaging Holding Company has reduced its earnings per share by 3.4% a year over the last three years. In the last year, its revenue is up 5.7%.

The decline in EPS is a bit concerning. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Graphic Packaging Holding Company Been A Good Investment?

Graphic Packaging Holding Company has served shareholders reasonably well, with a total return of 32% over three years. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

In Summary...

Shareholder returns, while positive, should be looked at along with earnings, which have not grown at all recently. This makes us think the share price momentum may slow in the future. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.

CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 2 warning signs for Graphic Packaging Holding that investors should look into moving forward.

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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