Here's What We Think About Kellogg's (NYSE:K) CEO Pay

This article will reflect on the compensation paid to Steve Cahillane who has served as CEO of Kellogg Company (NYSE:K) since 2017. This analysis will also assess whether Kellogg pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

View our latest analysis for Kellogg

How Does Total Compensation For Steve Cahillane Compare With Other Companies In The Industry?

Our data indicates that Kellogg Company has a market capitalization of US$24b, and total annual CEO compensation was reported as US$9.7m for the year to December 2019. This means that the compensation hasn't changed much from last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.3m.

For comparison, other companies in the industry with market capitalizations above US$8.0b, reported a median total CEO compensation of US$11m. This suggests that Kellogg remunerates its CEO largely in line with the industry average. Moreover, Steve Cahillane also holds US$3.5m worth of Kellogg stock directly under their own name.

Talking in terms of the industry, salary represented approximately 22% of total compensation out of all the companies we analyzed, while other remuneration made up 78% of the pie. It's interesting to note that Kellogg allocates a smaller portion of compensation to salary 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.

A Look at Kellogg Company's Growth Numbers

Kellogg Company's earnings per share (EPS) grew 12% per year over the last three years. Its revenue is down 2.1% over the previous year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's always a tough situation when revenues are not growing, but ultimately profits are more important. 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 Kellogg Company Been A Good Investment?

With a total shareholder return of 12% over three years, Kellogg Company shareholders would, in general, be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.

To Conclude...

As previously discussed, Steve is compensated close to the median for companies of its size, and which belong to the same industry. But earnings growth for the company has been strong over the last three years, though shareholder returns in comparison haven't been as impressive. Considering overall performance, we'd say the compensation is fair, although stockholders will want to see higher returns moving forward.

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. That's why we did some digging and identified 1 warning sign for Kellogg that investors should think about before committing capital to this 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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