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Is Casella Waste Systems, Inc. (NASDAQ:CWST) Overpaying Its CEO?

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Simply Wall St
·4 min read
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In 1993, John Casella was appointed CEO of Casella Waste Systems, Inc. (NASDAQ:CWST). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we'll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.

See our latest analysis for Casella Waste Systems

How Does John Casella's Compensation Compare With Similar Sized Companies?

According to our data, Casella Waste Systems, Inc. has a market capitalization of US$2.2b, and paid its CEO total annual compensation worth US$2.7m over the year to December 2019. That's just a smallish increase of 7.9% on last year. While we always look at total compensation first, we note that the salary component is less, at US$575k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$1.0b to US$3.2b. The median total CEO compensation was US$4.9m.

Pay mix tells us a lot about how a company functions versus the wider industry, and it's no different in the case of Casella Waste Systems. On a sector level, around 22% of total compensation represents salary and 78% is other remuneration. Casella Waste Systems does not set aside a larger portion of remuneration in the form of salary, maintaining the same rate as the wider market.

At first glance this seems like a real positive for shareholders, since John Casella is paid less than the average total compensation paid by similar sized companies. While this is a good thing, you'll need to understand the business better before you can form an opinion. You can see, below, how CEO compensation at Casella Waste Systems has changed over time.

NasdaqGS:CWST CEO Compensation May 3rd 2020
NasdaqGS:CWST CEO Compensation May 3rd 2020

Is Casella Waste Systems, Inc. Growing?

On average over the last three years, Casella Waste Systems, Inc. has seen earnings per share (EPS) move in a favourable direction by 81% each year (using a line of best fit). It achieved revenue growth of 13% over the last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. Shareholders might be interested in this free visualization of analyst forecasts.

Has Casella Waste Systems, Inc. Been A Good Investment?

Boasting a total shareholder return of 203% over three years, Casella Waste Systems, 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...

It looks like Casella Waste Systems, Inc. pays its CEO less than similar sized companies.

Since the business is growing, many would argue this suggests the pay is modest. And given most shareholders are probably very happy with recent returns, you might even think that John Casella deserves a raise! It's not often we see shareholders do so well, and yet the CEO is paid modestly. But it is even better if company insiders are also buying shares with their own money. On another note, Casella Waste Systems has 2 warning signs (and 1 which makes us a bit uncomfortable) we think you should know about.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.