Sean Keohane became the CEO of Cabot Corporation (NYSE:CBT) in 2016, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Cabot pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Comparing Cabot Corporation's CEO Compensation With the industry
Our data indicates that Cabot Corporation has a market capitalization of US$2.2b, and total annual CEO compensation was reported as US$6.7m for the year to September 2019. That is, the compensation was roughly the same as last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$988k.
In comparison with other companies in the industry with market capitalizations ranging from US$1.0b to US$3.2b, the reported median CEO total compensation was US$5.2m. This suggests that Cabot remunerates its CEO largely in line with the industry average. What's more, Sean Keohane holds US$3.8m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
On an industry level, roughly 19% of total compensation represents salary and 81% is other remuneration. Cabot sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
Cabot Corporation's Growth
Cabot Corporation has reduced its earnings per share by 32% a year over the last three years. It saw its revenue drop 17% over the last year.
The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Cabot Corporation Been A Good Investment?
With a three year total loss of 22% for the shareholders, Cabot Corporation would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
As we touched on above, Cabot Corporation is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. On the other hand, EPS growth and total shareholder return have been negative for the last three years. Considering overall performance, shareholders will likely hold off support for a raise until results improve.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 4 warning signs for Cabot that investors should look into moving forward.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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. 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email email@example.com.