Yahoo Finance Shareholders May Be More Conservative With AGCO Corporation's (NYSE:AGCO) CEO Compensation For Now
Key Insights
AGCO will host its Annual General Meeting on 25th of April
Total pay for CEO Eric Hansotia includes US$1.32m salary
The overall pay is 105% above the industry average
AGCO's EPS grew by 40% over the past three years while total shareholder loss over the past three years was 10%
As many shareholders of AGCO Corporation (NYSE:AGCO) will be aware, they have not made a gain on their investment in the past three years. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. The AGM coming up on the 25th of April could be an opportunity for shareholders to bring these concerns to the board's attention. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.
See our latest analysis for AGCO
Comparing AGCO Corporation's CEO Compensation With The Industry
Our data indicates that AGCO Corporation has a market capitalization of US$8.7b, and total annual CEO compensation was reported as US$17m for the year to December 2023. We note that's an increase of 29% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.3m.
On examining similar-sized companies in the American Machinery industry with market capitalizations between US$4.0b and US$12b, we discovered that the median CEO total compensation of that group was US$8.4m. Accordingly, our analysis reveals that AGCO Corporation pays Eric Hansotia north of the industry median. Furthermore, Eric Hansotia directly owns US$17m worth of shares in the company, implying that they are deeply invested in the company's success.
Component | 2023 | 2022 | Proportion (2023) |
Salary | US$1.3m | US$1.2m | 8% |
Other | US$16m | US$12m | 92% |
Total Compensation | US$17m | US$13m | 100% |
On an industry level, roughly 15% of total compensation represents salary and 85% is other remuneration. In AGCO's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
AGCO Corporation's Growth
AGCO Corporation's earnings per share (EPS) grew 40% per year over the last three years. In the last year, its revenue is up 14%.
This demonstrates that the company has been improving recently and is good news for the shareholders. It's a real positive to see this sort of revenue growth in a single year. That suggests a healthy and growing business. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has AGCO Corporation Been A Good Investment?
With a three year total loss of 10% for the shareholders, AGCO Corporation would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
To Conclude...
Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We did our research and spotted 1 warning sign for AGCO that investors should look into moving forward.
Important note: AGCO 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.
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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.
