Paul Manning has been the CEO of Sensient Technologies Corporation (NYSE:SXT) since 2014. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we’ll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Paul Manning’s Compensation Compare With Similar Sized Companies?
According to our data, Sensient Technologies Corporation has a market capitalization of US$1.8b, and paid its CEO total annual compensation worth US$5.8m over the year to December 2019. Notably, that’s an increase of 26% over the year before. While we always look at total compensation first, we note that the salary component is less, at US$945k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. We looked at a group of companies with market capitalizations from US$1.0b to US$3.2b, and the median CEO total compensation was US$4.4m.
As you can see, Paul Manning is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Sensient Technologies Corporation is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance.
You can see a visual representation of the CEO compensation at Sensient Technologies, below.
Is Sensient Technologies Corporation Growing?
On average over the last three years, Sensient Technologies Corporation has grown earnings per share (EPS) by 7.9% each year (using a line of best fit). In the last year, its revenue is down 4.6%.
I would argue that the lack of revenue growth in the last year is less than ideal, but I’m happy with the EPS growth. These two metric are moving in different directions, so while it’s hard to be confident judging performance, we think the stock is worth watching. Shareholders might be interested in this free visualization of analyst forecasts.
Has Sensient Technologies Corporation Been A Good Investment?
With a three year total loss of 44%, Sensient Technologies Corporation would certainly have some dissatisfied shareholders. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.
We compared the total CEO remuneration paid by Sensient Technologies Corporation, and compared it to remuneration at a group of similar sized companies. Our data suggests that it pays above the median CEO pay within that group.
Over the last three years, shareholder returns have been downright disappointing, and the underlying business has failed to impress us. This contrasts with the growth in CEO remuneration, in the last year. Shareholders may wish to consider further research. Although we don’t think the CEO pay is too high, it is probably more on the generous side of things. Moving away from CEO compensation for the moment, we’ve identified 4 warning signs for Sensient Technologies that you should be aware of before investing.
Important note: Sensient Technologies 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.
If you spot an error that warrants correction, please contact the editor at email@example.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.
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