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In 2014 John Robinson was appointed CEO of Aaron's, Inc. (NYSE:AAN). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we'll consider growth that the business demonstrates. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does John Robinson's Compensation Compare With Similar Sized Companies?
Our data indicates that Aaron's, Inc. is worth US$4.3b, and total annual CEO compensation is US$7.2m. (This is based on the year to December 2018). We think total compensation is more important but we note that the CEO salary is lower, at US$785k. We examined companies with market caps from US$2.0b to US$6.4b, and discovered that the median CEO total compensation of that group was US$5.2m.
Thus we can conclude that John Robinson receives more in total compensation than the median of a group of companies in the same market, and of similar size to Aaron's, Inc.. However, this doesn't necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.
You can see a visual representation of the CEO compensation at Aaron's, below.
Is Aaron's, Inc. Growing?
Over the last three years Aaron's, Inc. has grown its earnings per share (EPS) by an average of 27% per year (using a line of best fit). In the last year, its revenue is up 11%.
This demonstrates that the company has been improving recently. A good result. It's a real positive to see this sort of growth in a single year. That suggests a healthy and growing business. You might want to check this free visual report on analyst forecasts for future earnings.
Has Aaron's, Inc. Been A Good Investment?
Boasting a total shareholder return of 183% over three years, Aaron's, 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 examined the amount Aaron's, Inc. pays its CEO, and compared it to the amount paid by similar sized companies. Our data suggests that it pays above the median CEO pay within that group.
However we must not forget that the EPS growth has been very strong over three years. Even better, returns to shareholders have been plentiful, over the same time period. As a result of this good performance, the CEO remuneration may well be quite reasonable. Whatever your view on compensation, you might want to check if insiders are buying or selling Aaron's shares (free trial).
Important note: Aaron's may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
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.
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.