CEO Tod Carpenter has done a decent job of delivering relatively good performance at Donaldson Company, Inc. (NYSE:DCI) recently. As shareholders go into the upcoming AGM on 18 November 2022, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. Here is our take on why we think the CEO compensation looks appropriate.

Check out our latest analysis for Donaldson Company

How Does Total Compensation For Tod Carpenter Compare With Other Companies In The Industry?

Our data indicates that Donaldson Company, Inc. has a market capitalization of US$7.4b, and total annual CEO compensation was reported as US$7.0m for the year to July 2022. This means that the compensation hasn't changed much from 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$4.0b and US$12b had a median total CEO compensation of US$9.3m. So it looks like Donaldson Company compensates Tod Carpenter in line with the median for the industry. Moreover, Tod Carpenter also holds US$13m worth of Donaldson Company 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 15% of total compensation represents salary, while the remainder of 85% is other remuneration. There isn't a significant difference between Donaldson Company and the broader market, in terms of salary allocation in the overall compensation package. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

Donaldson Company, Inc.'s Growth

Donaldson Company, Inc.'s earnings per share (EPS) grew 9.3% per year over the last three years. It achieved revenue growth of 16% over the last year.

We think the revenue growth is good. And, while modest, the EPS growth is noticeable. Although we'll stop short of calling the stock a top performer, we think the company has potential. 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 Donaldson Company, Inc. Been A Good Investment?

With a total shareholder return of 15% over three years, Donaldson Company, Inc. shareholders would, in general, be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

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. Despite the pleasing results, we still think that any proposed increases to CEO compensation will be examined based on a case by case basis and linked to performance outcomes.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 2 warning signs for Donaldson Company that you should be aware of before investing.

Important note: Donaldson Company is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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