Here's Why 3M Company's (NYSE:MMM) CEO Compensation Is The Least Of Shareholders' Concerns

Performance at 3M Company (NYSE:MMM) has been reasonably good and CEO Mike Roman has done a decent job of steering the company in the right direction. As shareholders go into the upcoming AGM on 11 May 2021, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. Based on our analysis of the data below, we think CEO compensation seems reasonable for now.

Check out our latest analysis for 3M

How Does Total Compensation For Mike Roman Compare With Other Companies In The Industry?

At the time of writing, our data shows that 3M Company has a market capitalization of US$114b, and reported total annual CEO compensation of US$21m for the year to December 2020. Notably, that's an increase of 13% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.3m.

In comparison with other companies in the industry with market capitalizations over US$8.0b , the reported median total CEO compensation was US$19m. From this we gather that Mike Roman is paid around the median for CEOs in the industry. Moreover, Mike Roman also holds US$4.0m worth of 3M stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Speaking on an industry level, nearly 8% of total compensation represents salary, while the remainder of 92% is other remuneration. It's interesting to note that 3M allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at 3M Company's Growth Numbers

3M Company has seen its earnings per share (EPS) increase by 12% a year over the past three years. It achieved revenue growth of 1.9% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. 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 3M Company Been A Good Investment?

With a total shareholder return of 9.4% over three years, 3M Company has done okay by shareholders, but there's always room for improvement. As a result, investors in the company might be reluctant about agreeing to increase CEO pay in the future, before seeing an improvement on their returns.

In Summary...

Given that the company's overall performance has been reasonable, the CEO remuneration policy might not be shareholders' central point of focus in the upcoming AGM. In saying that, any proposed increase to CEO compensation will still be assessed on how reasonable it is based on performance and industry benchmarks.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 1 warning sign for 3M that investors should look into moving forward.

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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