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In 2014 Mark Sutton was appointed CEO of International Paper Company (NYSE:IP). This analysis aims first to contrast CEO compensation with other large companies. Then we'll look at a snap shot of the business growth. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.
How Does Mark Sutton's Compensation Compare With Similar Sized Companies?
At the time of writing our data says that International Paper Company has a market cap of US$19b, and is paying total annual CEO compensation of US$22m. (This figure is for the year to December 2018). We note that's an increase of 13% above last year. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$1.4m. We took a group of companies with market capitalizations over US$8.0b, and calculated the median CEO total compensation to be US$11m. There aren't very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.
Thus we can conclude that Mark Sutton receives more in total compensation than the median of a group of large companies in the same market as International Paper Company. 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.
You can see, below, how CEO compensation at International Paper has changed over time.
Is International Paper Company Growing?
Over the last three years International Paper Company has grown its earnings per share (EPS) by an average of 41% per year (using a line of best fit). It achieved revenue growth of 4.9% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see modest revenue growth, suggesting the underlying business is healthy. It could be important to check this free visual depiction of what analysts expect for the future.
Has International Paper Company Been A Good Investment?
With a total shareholder return of 24% over three years, International Paper Company shareholders would, in general, be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
We examined the amount International Paper Company pays its CEO, and compared it to the amount paid by other large companies. 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. We also note that, over the same time frame, shareholder returns haven't been bad. While it may be worth researching further, we don't see a problem with the CEO pay, given the good EPS growth. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling International Paper (free visualization of insider trades).
If you want to buy a stock that is better than International Paper, this free list of high return, low debt companies is a great place to look.
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 firstname.lastname@example.org. 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.