In 2014 Lenny Comma was appointed CEO of Jack in the Box Inc. (NASDAQ:JACK). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Lenny Comma's Compensation Compare With Similar Sized Companies?
According to our data, Jack in the Box Inc. has a market capitalization of US$2.0b, and pays its CEO total annual compensation worth US$5.0m. (This number is for the twelve months until September 2018). While we always look at total compensation first, we note that the salary component is less, at US$920k. 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$3.6m.
It would therefore appear that Jack in the Box Inc. pays Lenny Comma more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
You can see a visual representation of the CEO compensation at Jack in the Box, below.
Is Jack in the Box Inc. Growing?
Over the last three years Jack in the Box Inc. has grown its earnings per share (EPS) by an average of 8.3% per year (using a line of best fit). In the last year, its revenue is down -17%.
I generally like to see a little revenue growth, but it is good to see EPS growth. These two metric are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. It could be important to check this free visual depiction of what analysts expect for the future.
Has Jack in the Box Inc. Been A Good Investment?
With a total shareholder return of 20% over three years, Jack in the Box Inc. shareholders would, in general, be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.
We examined the amount Jack in the Box Inc. pays its CEO, and compared it to the amount paid by similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.
We generally prefer to see stronger EPS growth, and we're not particularly impressed with the total shareholder return, over the last three years. So it's certainly hard to argue that the CEO is modestly paid, although we don't see the remuneration as an issue. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Jack in the Box.
Important note: Jack in the Box 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.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.