George Freeman became the CEO of Universal Corporation (NYSE:UVV) in 2008. 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 - as a second measure of performance - we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does George Freeman's Compensation Compare With Similar Sized Companies?
Our data indicates that Universal Corporation is worth US$1.4b, and total annual CEO compensation was reported as US$5.3m for the year to March 2019. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$918k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. We examined companies with market caps from US$1.0b to US$3.2b, and discovered that the median CEO total compensation of that group was US$3.9m.
It would therefore appear that Universal Corporation pays George Freeman more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
You can see, below, how CEO compensation at Universal has changed over time.
Is Universal Corporation Growing?
On average over the last three years, Universal Corporation has grown earnings per share (EPS) by 14% each year (using a line of best fit). In the last year, its revenue is down 4.6%.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. Revenue growth is a real positive for growth, but ultimately profits are more important. We don't have analyst forecasts, but you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Universal Corporation Been A Good Investment?
Universal Corporation has generated a total shareholder return of 3.7% over three years, so most shareholders wouldn't be too disappointed. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
We compared total CEO remuneration at Universal Corporation with the amount paid at companies with a similar market capitalization. Our data suggests that it pays above the median CEO pay within that group.
Importantly, though, the company has impressed with its earnings per share growth, over three years. Looking at the same time period, we think that the shareholder returns are respectable. While it may be worth researching further, we don't see a problem with the CEO pay, given the good EPS growth. Whatever your view on compensation, you might want to check if insiders are buying or selling Universal shares (free trial).
Important note: Universal 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 firstname.lastname@example.org. 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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