Does Aramark’s (NYSE:ARMK) CEO Salary Reflect Performance?
Eric Foss became the CEO of Aramark (NYSE:ARMK) in 2012. First, this article will compare CEO compensation with compensation at similar sized companies. 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. The aim of all this is to consider the appropriateness of CEO pay levels.
See our latest analysis for Aramark
How Does Eric Foss’s Compensation Compare With Similar Sized Companies?
According to our data, Aramark has a market capitalization of US$9.0b, and pays its CEO total annual compensation worth US$16m. (This is based on the year to 2017). We think total compensation is more important but we note that the CEO salary is lower, at US$1.7m. We examined companies with market caps from US$4.0b to US$12b, and discovered that the median CEO compensation of that group was US$6.8m.
As you can see, Eric Foss is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Aramark is paying too much. 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 Aramark has changed from year to year.
Is Aramark Growing?
On average over the last three years, Aramark has grown earnings per share (EPS) by 31% each year. It achieved revenue growth of 8.1% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It’s also good to see modest revenue growth, suggesting the underlying business is healthy.
It could be important to check this free visual depiction of what analysts expect for the future.
Has Aramark Been A Good Investment?
Aramark has generated a total shareholder return of 16% over three years, so most shareholders would be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.
In Summary…
We compared the total CEO remuneration paid by Aramark, 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.
Importantly, though, the company has impressed with its earnings per share growth, over three years. We also think investors are doing ok, over the same time period. While it may be worth researching further, we don’t see a problem with the CEO pay, given the good EPS growth. Whatever your view on compensation, you might want to check if insiders are buying or selling Aramark shares (free trial).
Or you might prefer examine intently this intuitive graph showing past earnings and revenue.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
