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Marty Mucci has been the CEO of Paychex, Inc. (NASDAQ:PAYX) since 2010, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
How Does Total Compensation For Marty Mucci Compare With Other Companies In The Industry?
According to our data, Paychex, Inc. has a market capitalization of US$32b, and paid its CEO total annual compensation worth US$8.1m over the year to May 2020. This means that the compensation hasn't changed much from last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$993k.
In comparison with other companies in the industry with market capitalizations over US$8.0b , the reported median total CEO compensation was US$11m. So it looks like Paychex compensates Marty Mucci in line with the median for the industry. Moreover, Marty Mucci also holds US$32m worth of Paychex stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Talking in terms of the industry, salary represented approximately 14% of total compensation out of all the companies we analyzed, while other remuneration made up 86% of the pie. Paychex sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
Paychex, Inc.'s Growth
Paychex, Inc.'s earnings per share (EPS) grew 9.5% per year over the last three years. It saw its revenue drop 1.5% over the last year.
We would prefer it if there was revenue growth, but it is good to see a modest EPS growth at least. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. 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 Paychex, Inc. Been A Good Investment?
We think that the total shareholder return of 40%, over three years, would leave most Paychex, Inc. shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
As we touched on above, Paychex, Inc. is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. But the company has been found wanting in terms of EPS growth over the past three years. On the other hand, shareholder returns over the same period have been very healthy. We would like to see EPS growth from the business, although we wouldn't say the CEO compensation is high.
CEO compensation can have a massive impact on performance, but it's just one element. We've identified 1 warning sign for Paychex that investors should be aware of in a dynamic business environment.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.
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. 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.
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