“Show me the incentive and I will show you the outcome” – Charlie Munger
This classic quote from Berkshire Hathaway’s nonagenarian Vice Chairman is something that fundamental investors need to always keep in mind when analyzing companies. Is your CEO paid to grow sales at any cost? Will she amass generational wealth if she sells the company?
Thankfully, these questions can be answered by a careful review of various SEC filings regarding compensation, and, especially, by noting changes compared to prior years. Analyzing pay is not used only by buy-side and sell-side analysts: compensation consultants, and, increasingly, activist shareholders and political groups have been scrutinizing executive pay. Looking for changes in company filings is easy in Sentieo’s document search which allows users to compare filings to any other filing, filed at any time with the SEC.
For example, here we are looking for changes in Colgate Palmolive’s omnibus executive compensation plan that was previously filed five years ago. We have selected the “All Changes” option in Redlining Mode and compare the recent 8-K filing to a custom-selected 8-K filing from five years ago that we located easily in through our Document Search.