In 2016, Patti Poppe was appointed CEO of CMS Energy Corporation (NYSE:CMS). First, this article will compare CEO compensation with compensation at other large companies. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Patti Poppe's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that CMS Energy Corporation has a market cap of US$16b, and reported total annual CEO compensation of US$9.0m for the year to December 2019. Notably, that's an increase of 11% over the year before. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$1.3m. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. When we examined a group of companies with market caps over US$8.0b, we found that their median CEO total compensation was US$12m. (We took a wide range because the CEOs of massive companies tend to be paid similar amounts - even though some are quite a bit bigger than others).
Now let's take a look at the pay mix on an industry and company level to gain a better understanding of where CMS Energy stands. Talking in terms of the sector, salary represented approximately 13% of total compensation out of all the companies we analysed, while other remuneration made up 87% of the pie. So it seems like there isn't a significant difference between CMS Energy and the broader market, in terms of salary allocation in the overall compensation package.
So Patti Poppe is paid around the average of the companies we looked at. Although this fact alone doesn't tell us a great deal, it becomes more relevant when considered against the business performance. You can see, below, how CEO compensation at CMS Energy has changed over time.
Is CMS Energy Corporation Growing?
CMS Energy Corporation has seen earnings per share (EPS) move positively by an average of 8.5% a year, over the last three years (using a line of best fit). It saw its revenue drop 4.7% over the last year.
I generally like to see a little revenue growth, but I'm happy with the EPS growth. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Shareholders might be interested in this free visualization of analyst forecasts.
Has CMS Energy Corporation Been A Good Investment?
I think that the total shareholder return of 38%, over three years, would leave most CMS Energy Corporation shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
Remuneration for Patti Poppe is close enough to the median pay for a CEO of a large company .
While the growth could be better, the shareholder returns are clearly good. So we can conclude that on this analysis the CEO compensation seems pretty sound. Looking into other areas, we've picked out 1 warning sign for CMS Energy that investors should think about before committing capital to this stock.
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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