This article will reflect on the compensation paid to Rick Olson who has served as CEO of The Toro Company (NYSE:TTC) since 2016. This analysis will also assess whether Toro pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
How Does Total Compensation For Rick Olson Compare With Other Companies In The Industry?
At the time of writing, our data shows that The Toro Company has a market capitalization of US$11b, and reported total annual CEO compensation of US$6.0m for the year to October 2020. We note that's an increase of 14% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$871k.
For comparison, other companies in the industry with market capitalizations above US$8.0b, reported a median total CEO compensation of US$7.6m. This suggests that Toro remunerates its CEO largely in line with the industry average. Moreover, Rick Olson also holds US$13m worth of Toro stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
On an industry level, roughly 17% of total compensation represents salary and 83% is other remuneration. Toro pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
The Toro Company's Growth
Over the past three years, The Toro Company has seen its earnings per share (EPS) grow by 7.4% per year. It achieved revenue growth of 7.6% over the last year.
We would argue that the improvement in revenue is good, but isn't particularly impressive, but it is good to see modest EPS growth. It's clear the performance has been quite decent, but it it falls short of outstanding,based on this information. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has The Toro Company Been A Good Investment?
Most shareholders would probably be pleased with The Toro Company for providing a total return of 71% over three years. 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.
As we touched on above, The Toro Company 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 business isn't reporting great numbers in terms of EPS growth. Meanwhile, shareholder returns have remained positive over the same time frame. There is room for improved company performance, but we don't see the CEO compensation as a big issue here.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 2 warning signs for Toro that investors should think about before committing capital to this stock.
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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