Key Insights

• Kadant to hold its Annual General Meeting on 15th of May
• Total pay for CEO Jeffrey Powell includes US$898.9k salary
• The overall pay is comparable to the industry average
• Kadant's total shareholder return over the past three years was 68% while its EPS grew by 23% over the past three years

We have been pretty impressed with the performance at Kadant Inc. (NYSE:KAI) recently and CEO Jeffrey Powell deserves a mention for their role in it. Coming up to the next AGM on 15th of May, shareholders would be keeping this in mind. It is likely that the focus will be on company strategy going forward as shareholders hear from the board and cast their votes on resolutions such as executive remuneration and other matters. In light of the great performance, we discuss the case why we think CEO compensation is not excessive.

Comparing Kadant Inc.'s CEO Compensation With The Industry

Our data indicates that Kadant Inc. has a market capitalization of US$3.3b, and total annual CEO compensation was reported as US$6.0m for the year to December 2023. That's a notable increase of 22% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$899k.

On comparing similar companies from the American Machinery industry with market caps ranging from US$2.0b to US$6.4b, we found that the median CEO total compensation was US$6.2m. From this we gather that Jeffrey Powell is paid around the median for CEOs in the industry. Furthermore, Jeffrey Powell directly owns US$17m worth of shares in the company, implying that they are deeply invested in the company's success.

Talking in terms of the industry, salary represented approximately 15% of total compensation out of all the companies we analyzed, while other remuneration made up 85% of the pie. There isn't a significant difference between Kadant 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.

A Look at Kadant Inc.'s Growth Numbers

Kadant Inc.'s earnings per share (EPS) grew 23% per year over the last three years. In the last year, its revenue is up 7.6%.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's also good to see modest revenue growth, suggesting the underlying business is healthy. 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 Kadant Inc. Been A Good Investment?

Most shareholders would probably be pleased with Kadant Inc. for providing a total return of 68% over three years. 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.

To Conclude...

The company's solid performance might have made most shareholders happy, possibly making CEO remuneration the least of the matters to be discussed in the AGM. However, investors will get the chance to engage on key strategic initiatives and future growth opportunities for the company and set their longer-term expectations.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 1 warning sign for Kadant that investors should think about before committing capital to this stock.

Switching gears from Kadant, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.