Key Insights

• Tempur Sealy International will host its Annual General Meeting on 9th of May
• CEO Scott Thompson's total compensation includes salary of US$1.13m
• Total compensation is similar to the industry average
• Tempur Sealy International's total shareholder return over the past three years was 35% while its EPS grew by 8.1% over the past three years

Under the guidance of CEO Scott Thompson, Tempur Sealy International, Inc. (NYSE:TPX) has performed reasonably well recently. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 9th of May. Here is our take on why we think the CEO compensation looks appropriate.

How Does Total Compensation For Scott Thompson Compare With Other Companies In The Industry?

At the time of writing, our data shows that Tempur Sealy International, Inc. has a market capitalization of US$8.7b, and reported total annual CEO compensation of US$12m for the year to December 2023. That's a notable decrease of 40% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.1m.

On comparing similar companies from the American Consumer Durables industry with market caps ranging from US$4.0b to US$12b, we found that the median CEO total compensation was US$11m. This suggests that Tempur Sealy International remunerates its CEO largely in line with the industry average. What's more, Scott Thompson holds US$130m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Talking in terms of the industry, salary represented approximately 18% of total compensation out of all the companies we analyzed, while other remuneration made up 82% of the pie. Tempur Sealy International pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Tempur Sealy International, Inc.'s Growth

Tempur Sealy International, Inc. has seen its earnings per share (EPS) increase by 8.1% a year over the past three years. In the last year, its revenue changed by just 0.09%.

We're not particularly impressed by the revenue growth, but the modest improvement in EPS is good. So there are some positives here, but not enough to earn high praise. 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 Tempur Sealy International, Inc. Been A Good Investment?

Boasting a total shareholder return of 35% over three years, Tempur Sealy International, Inc. has done well by shareholders. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its 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. However, we still think that any proposed increase in CEO compensation will be examined closely to make sure the compensation is appropriate and linked to performance.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 2 warning signs for Tempur Sealy International that you should be aware of before investing.

Important note: Tempur Sealy International 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.

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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.