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Most Shareholders Will Probably Agree With Kellanova's (NYSE:K) CEO Compensation

Key Insights

  • Kellanova's Annual General Meeting to take place on 26th of April

  • Total pay for CEO Steve Cahillane includes US$1.34m salary

  • Total compensation is similar to the industry average

  • Kellanova's EPS declined by 15% over the past three years while total shareholder return over the past three years was 7.8%

Despite Kellanova's (NYSE:K) share price growing positively in the past few years, the per-share earnings growth has not grown to investors' expectations, suggesting that there could be other factors at play driving the share price. The upcoming AGM on 26th of April may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.

Check out our latest analysis for Kellanova

Comparing Kellanova's CEO Compensation With The Industry

According to our data, Kellanova has a market capitalization of US$20b, and paid its CEO total annual compensation worth US$17m over the year to December 2023. We note that's an increase of 28% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.3m.

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On comparing similar companies in the American Food industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$16m. From this we gather that Steve Cahillane is paid around the median for CEOs in the industry. Furthermore, Steve Cahillane directly owns US$21m worth of shares in the company, implying that they are deeply invested in the company's success.

Component

2023

2022

Proportion (2023)

Salary

US$1.3m

US$1.3m

8%

Other

US$16m

US$12m

92%

Total Compensation

US$17m

US$13m

100%

Speaking on an industry level, nearly 21% of total compensation represents salary, while the remainder of 79% is other remuneration. It's interesting to note that Kellanova allocates a smaller portion of compensation to salary in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

ceo-compensation
ceo-compensation

A Look at Kellanova's Growth Numbers

Kellanova has reduced its earnings per share by 15% a year over the last three years. It achieved revenue growth of 3.5% over the last year.

The decline in EPS is a bit concerning. The fairly low revenue growth fails to impress given that the EPS is down. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Kellanova Been A Good Investment?

Kellanova has not done too badly by shareholders, with a total return of 7.8%, over three years. It would be nice to see that metric improve in the future. In light of that, investors might probably want to see an improvement on their returns before they feel generous about increasing the CEO remuneration.

To Conclude...

Shareholder returns, while positive, should be looked at along with earnings, which have not grown at all recently. This makes us think the share price momentum may slow in the future. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

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 2 warning signs for Kellanova that you should be aware of before investing.

Important note: Kellanova 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.