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How Should Investors React To The Kroger Co.'s (NYSE:KR) CEO Pay?

Simply Wall St

In 2014 William McMullen was appointed CEO of The Kroger Co. (NYSE:KR). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. Next, we'll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.

Check out our latest analysis for Kroger

How Does William McMullen's Compensation Compare With Similar Sized Companies?

Our data indicates that The Kroger Co. is worth US$17b, and total annual CEO compensation is US$12m. (This figure is for the year to February 2019). That's a fairly small increase of 4.4% on year before. We think total compensation is more important but we note that the CEO salary is lower, at US$1.3m. We took a group of companies with market capitalizations over US$8.0b, and calculated the median CEO total compensation to be US$11m. Once you start looking at very large companies, you need to take a broader range, because there simply aren't that many of them.

So William McMullen receives a similar amount to the median CEO pay, amongst the companies we looked at. While this data point isn't particularly informative alone, it gains more meaning when considered with business performance.

You can see, below, how CEO compensation at Kroger has changed over time.

NYSE:KR CEO Compensation, July 25th 2019

Is The Kroger Co. Growing?

Over the last three years The Kroger Co. has grown its earnings per share (EPS) by an average of 25% per year (using a line of best fit). Its revenue is down -2.7% over last year.

This demonstrates that the company has been improving recently. A good result. While it would be good to see revenue growth, profits matter more in the end. You might want to check this free visual report on analyst forecasts for future earnings.

Has The Kroger Co. Been A Good Investment?

With a three year total loss of 37%, The Kroger Co. would certainly have some dissatisfied shareholders. So shareholders would probably think the company shouldn't be too generous with CEO compensation.

In Summary...

William McMullen is paid around the same as most CEOs of large companies.

We think that the EPS growth is very pleasing, but it's disappointing to see negative shareholder returns over three years. We'd be surprised if shareholders want to see a pay rise for the CEO, but we'd stop short of calling their pay too generous. Shareholders may want to check for free if Kroger insiders are buying or selling shares.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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 editorial-team@simplywallst.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.