Ferro Corporation (NYSE:FOE) has not performed well recently and CEO Peter Thomas will probably need to up their game. At the upcoming AGM on 29 April 2021, shareholders can hear from the board including their plans for turning around performance. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. The data we present below explains why we think CEO compensation is not consistent with recent performance.
How Does Total Compensation For Peter Thomas Compare With Other Companies In The Industry?
Our data indicates that Ferro Corporation has a market capitalization of US$1.4b, and total annual CEO compensation was reported as US$5.4m for the year to December 2020. That's a notable increase of 8.9% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.0m.
For comparison, other companies in the same industry with market capitalizations ranging between US$1.0b and US$3.2b had a median total CEO compensation of US$5.6m. From this we gather that Peter Thomas is paid around the median for CEOs in the industry. Moreover, Peter Thomas also holds US$15m worth of Ferro stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | US$1.0m | US$969k | 18% |
| Other | US$4.4m | US$4.0m | 82% |
| Total Compensation | US$5.4m | US$5.0m | 100% |
On an industry level, roughly 17% of total compensation represents salary and 83% is other remuneration. Ferro is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
A Look at Ferro Corporation's Growth Numbers
Over the last three years, Ferro Corporation has shrunk its earnings per share by 6.8% per year. It saw its revenue drop 5.5% 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. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has Ferro Corporation Been A Good Investment?
Since shareholders would have lost about 28% over three years, some Ferro Corporation investors would surely be feeling negative emotions. So shareholders would probably want the company to be less generous with CEO compensation.
In Summary...
Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 2 warning signs for Ferro (of which 1 is concerning!) that you should know about in order to have a holistic understanding of the stock.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.
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.
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