Yahoo Finance Why We Think McCormick & Company, Incorporated's (NYSE:MKC) CEO Compensation Is Not Excessive At All
Key Insights
McCormick's Annual General Meeting to take place on 29th of March
Salary of US$1.25m is part of CEO Lawrence Kurzius's total remuneration
Total compensation is similar to the industry average
Over the past three years, McCormick's EPS fell by 1.4% and over the past three years, the total shareholder return was 22%
Despite positive share price growth of 22% for McCormick & Company, Incorporated (NYSE:MKC) over the last few years, earnings growth has been disappointing, which suggests something is amiss. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 29th of March. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.
See our latest analysis for McCormick
How Does Total Compensation For Lawrence Kurzius Compare With Other Companies In The Industry?
At the time of writing, our data shows that McCormick & Company, Incorporated has a market capitalization of US$19b, and reported total annual CEO compensation of US$10m for the year to November 2022. We note that's a decrease of 18% compared to last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.3m.
For comparison, other companies in the American Food industry with market capitalizations above US$8.0b, reported a median total CEO compensation of US$12m. From this we gather that Lawrence Kurzius is paid around the median for CEOs in the industry. What's more, Lawrence Kurzius holds US$36m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Component | 2022 | 2021 | Proportion (2022) |
Salary | US$1.3m | US$1.3m | 12% |
Other | US$9.2m | US$11m | 88% |
Total Compensation | US$10m | US$13m | 100% |
On an industry level, roughly 24% of total compensation represents salary and 76% is other remuneration. It's interesting to note that McCormick allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
McCormick & Company, Incorporated's Growth
Over the last three years, McCormick & Company, Incorporated has shrunk its earnings per share by 1.4% per year. Revenue was pretty flat on last year.
Its a bit disappointing to see that the company has failed to grow its EPS. And the flat revenue is seriously uninspiring. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has McCormick & Company, Incorporated Been A Good Investment?
With a total shareholder return of 22% over three years, McCormick & Company, Incorporated shareholders would, in general, be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.
In Summary...
While it's true that shareholders have owned decent returns, it's hard to overlook the lack of earnings growth and this makes us question whether these returns will continue. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.
CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. In our study, we found 2 warning signs for McCormick you should be aware of, and 1 of them is potentially serious.
Important note: McCormick is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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