Yahoo Finance How Should Investors React To Hormel Foods Corporation's (NYSE:HRL) CEO Pay?
Jim Snee has been the CEO of Hormel Foods Corporation (NYSE:HRL) since 2016. This analysis aims first to contrast CEO compensation with other large companies. 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. This method should give us information to assess how appropriately the company pays the CEO.
See our latest analysis for Hormel Foods
How Does Jim Snee's Compensation Compare With Similar Sized Companies?
According to our data, Hormel Foods Corporation has a market capitalization of US$22b, and paid its CEO total annual compensation worth US$6.4m over the year to October 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$883k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. We looked at a group of companies with market capitalizations over US$8.0b and the median CEO total compensation was US$11m. Once you start looking at very large companies, you need to take a broader range, because there simply aren't that many of them.
A first glance this seems like a real positive for shareholders, since Jim Snee is paid less than the average total compensation paid by other large companies. However, before we heap on the praise, we should delve deeper to understand business performance.
You can see, below, how CEO compensation at Hormel Foods has changed over time.
Is Hormel Foods Corporation Growing?
Over the last three years Hormel Foods Corporation has grown its earnings per share (EPS) by an average of 5.3% per year (using a line of best fit). Revenue was pretty flat on last year.
I would argue that the improvement in revenue isn't particularly impressive, but I'm happy with the modest EPS growth. Considering these factors I'd say performance has been pretty decent, though not amazing. It could be important to check this free visual depiction of what analysts expect for the future.
Has Hormel Foods Corporation Been A Good Investment?
With a total shareholder return of 20% over three years, Hormel Foods Corporation shareholders would, in general, be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.
In Summary...
It appears that Hormel Foods Corporation remunerates its CEO below most large companies.
It's well worth noting that while Jim Snee is paid less than most company leaders (at large companies, share price performance has been somewhat uninspiring. So shareholders may not be elated, but they shouldn't be worried about the CEO compensation, either. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Hormel Foods (free visualization of insider trades).
Important note: Hormel Foods 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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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. Thank you for reading.
