Shareholders can be a little conservative with CEO compensation at Cardinal Health, Inc. (NYSE: CAH) for now

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Under the leadership of CEO Mike Kaufmann, Cardinal Health, Inc. (NYSE: CAH) has done relatively well recently. As shareholders enter the next AGM on November 5, 2021, CEO compensation is unlikely to be their focus, but rather the steps management takes to continue the growth momentum. We present our case of why we think CEO compensation seems fair.

See our latest review for Cardinal Health

How does Mike Kaufmann’s total compensation compare to other companies in the industry?

According to our data, Cardinal Health, Inc. has a market capitalization of US $ 14 billion and paid its CEO a total annual compensation of US $ 12 million during the year through June 2021. We note that ‘this is a decrease of 12% compared to last year. While this analysis focuses on total compensation, it should be recognized that the salary portion is lower, valued at US $ 1.3 million.

By comparison, other companies in the industry with market capitalizations greater than US $ 8.0 billion, reported median total CEO compensation of US $ 16 million. From this we infer that Mike Kaufmann is paid around the median of industry CEOs. Additionally, Mike Kaufmann owns $ 16 million in company stock in his own name, indicating that they have a lot of skin in the game.

Making up 2021 2020 Proportion (2021)
Salary US $ 1.3 million US $ 1.3 million ten%
Other US $ 11 million US $ 13 million 90%
Total compensation $ 12 million $ 14 million 100%

At the industry level, about 18% of total compensation is salary and 82% is other compensation. Cardinal Health sets aside a smaller share of pay for pay, compared to the industry as a whole. If non-salary compensation dominates total salary, it is an indicator that the executive salary is linked to the performance of the company.

NYSE: CAH CEO Compensation October 30, 2021

A look at the growth numbers from Cardinal Health, Inc.

Over the past three years, Cardinal Health, Inc. has seen its earnings per share (EPS) increase by 38% per year. It achieved a turnover growth of 6.2% compared to last year.

Shareholders would be happy to know that the company has improved over the past few years. It is good to see a slight growth in revenue as it suggests that the business is capable of growing in a sustainable way. Going forward, you might want to check out this free visual report at analyst forecasts for the future profits of the company.

Was Cardinal Health, Inc. a Good Investment?

Cardinal Health, Inc. generated a total shareholder return of 4.3% over three years, so most shareholders wouldn’t be too disappointed. Although there is always room to improve. As a result, the company’s investors might be reluctant to agree to increase CEO compensation in the future, before seeing any improvement in their returns.

To conclude…

The company’s decent performance could have made most shareholders happy, perhaps making CEO compensation the least of the concerns to be discussed at the next AGM. Despite the satisfactory results, we still believe that any proposed increase in CEO compensation will be reviewed on a case-by-case basis and linked to performance results.

CEO compensation can have a huge impact on performance, but it’s only one element. This is why we have dug and identified 4 warning signs for Cardinal Health what investors should think about before committing capital to this stock.

Shifting gears from Cardinal Health, if you’re looking for a flawless balance sheet and premium returns, this free List of high yield, low leverage companies is a great place to look.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in any of the stocks mentioned.

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