In 1994 J. Harrison was appointed CEO of Coca-Cola Consolidated, Inc. (NASDAQ:COKE). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does J. Harrison's Compensation Compare With Similar Sized Companies?
According to our data, Coca-Cola Consolidated, Inc. has a market capitalization of US$2.4b, and pays its CEO total annual compensation worth US$12m. (This figure is for the year to December 2018). While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$1.1m. We examined companies with market caps from US$1.0b to US$3.2b, and discovered that the median CEO total compensation of that group was US$4.1m.
Thus we can conclude that J. Harrison receives more in total compensation than the median of a group of companies in the same market, and of similar size to Coca-Cola Consolidated, Inc.. However, this doesn't necessarily mean the pay is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
The graphic below shows how CEO compensation at Coca-Cola Consolidated has changed from year to year.
Is Coca-Cola Consolidated, Inc. Growing?
On average over the last three years, Coca-Cola Consolidated, Inc. has shrunk earnings per share by 21% each year (measured with a line of best fit). Its revenue is up 4.0% over last year.
Few shareholders would be pleased to read that earnings per share are lower over three years. The fairly low revenue growth fails to impress given that the earnings per share is down. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Although we don't have analyst forecasts, you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has Coca-Cola Consolidated, Inc. Been A Good Investment?
Boasting a total shareholder return of 120% over three years, Coca-Cola Consolidated, Inc. has done well by shareholders. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
We compared the total CEO remuneration paid by Coca-Cola Consolidated, Inc., and compared it to remuneration at a group of similar sized companies. Our data suggests that it pays above the median CEO pay within that group.
Neither earnings per share nor revenue have been growing sufficiently fast to impress us, over the last three years.
On the other hand, returns have been good, so the company is doing something right. Considering this, shareholders are probably not too worried about the CEO compensation. Whatever your view on compensation, you might want to check if insiders are buying or selling Coca-Cola Consolidated shares (free trial).
If you want to buy a stock that is better than Coca-Cola Consolidated, this free list of high return, low debt companies is a great place to look.
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If you spot an error that warrants correction, please contact the editor at email@example.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. Thank you for reading.