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Is TimkenSteel Corporation's (NYSE:TMST) CEO Pay Justified?

Simply Wall St

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In 2014 Tim Timken was appointed CEO of TimkenSteel Corporation (NYSE:TMST). First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.

View our latest analysis for TimkenSteel

How Does Tim Timken's Compensation Compare With Similar Sized Companies?

Our data indicates that TimkenSteel Corporation is worth US$333m, and total annual CEO compensation is US$4.7m. (This number is for the twelve months until December 2018). That's less than last year. We think total compensation is more important but we note that the CEO salary is lower, at US$887k. We examined companies with market caps from US$200m to US$800m, and discovered that the median CEO total compensation of that group was US$1.8m.

Thus we can conclude that Tim Timken receives more in total compensation than the median of a group of companies in the same market, and of similar size to TimkenSteel Corporation. However, this doesn't necessarily mean the pay is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.

The graphic below shows how CEO compensation at TimkenSteel has changed from year to year.

NYSE:TMST CEO Compensation, June 7th 2019

Is TimkenSteel Corporation Growing?

On average over the last three years, TimkenSteel Corporation has grown earnings per share (EPS) by 28% each year (using a line of best fit). In the last year, its revenue is up 14%.

This shows that the company has improved itself over the last few years. Good news for shareholders. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. Shareholders might be interested in this free visualization of analyst forecasts.

Has TimkenSteel Corporation Been A Good Investment?

With a three year total loss of 26%, TimkenSteel Corporation would certainly have some dissatisfied shareholders. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary...

We compared total CEO remuneration at TimkenSteel 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.

However we must not forget that the EPS growth has been very strong over three years. On the other hand returns to investors over the same period have probably disappointed many. While EPS is positive, we'd say shareholders would want better returns before the CEO is paid much more. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling TimkenSteel (free visualization of insider trades).

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.