MSC Industrial Direct Co., Inc.'s (NYSE:MSM) CEO Compensation Looks Acceptable To Us And Here's Why
Key Insights
MSC Industrial Direct will host its Annual General Meeting on 24th of January
CEO Erik Gershwind's total compensation includes salary of US$825.4k
The total compensation is similar to the average for the industry
MSC Industrial Direct's EPS grew by 13% over the past three years while total shareholder return over the past three years was 29%
CEO Erik Gershwind has done a decent job of delivering relatively good performance at MSC Industrial Direct Co., Inc. (NYSE:MSM) recently. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 24th of January. We present our case of why we think CEO compensation looks fair.
See our latest analysis for MSC Industrial Direct
How Does Total Compensation For Erik Gershwind Compare With Other Companies In The Industry?
According to our data, MSC Industrial Direct Co., Inc. has a market capitalization of US$5.3b, and paid its CEO total annual compensation worth US$4.9m over the year to September 2023. That's a notable decrease of 24% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$825k.
On examining similar-sized companies in the American Trade Distributors industry with market capitalizations between US$4.0b and US$12b, we discovered that the median CEO total compensation of that group was US$5.9m. So it looks like MSC Industrial Direct compensates Erik Gershwind in line with the median for the industry. Furthermore, Erik Gershwind directly owns US$204m worth of shares in the company, implying that they are deeply invested in the company's success.
Component | 2023 | 2022 | Proportion (2023) |
Salary | US$825k | US$816k | 17% |
Other | US$4.1m | US$5.6m | 83% |
Total Compensation | US$4.9m | US$6.5m | 100% |
Talking in terms of the industry, salary represented approximately 16% of total compensation out of all the companies we analyzed, while other remuneration made up 84% of the pie. MSC Industrial Direct is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
A Look at MSC Industrial Direct Co., Inc.'s Growth Numbers
MSC Industrial Direct Co., Inc.'s earnings per share (EPS) grew 13% per year over the last three years. It achieved revenue growth of 5.4% over the last year.
This demonstrates that the company has been improving recently and is good news for the shareholders. It's nice to see revenue heading northwards, as this is consistent with healthy business conditions. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has MSC Industrial Direct Co., Inc. Been A Good Investment?
MSC Industrial Direct Co., Inc. has served shareholders reasonably well, with a total return of 29% over three years. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.
To Conclude...
The company's decent performance might have made most shareholders happy, possibly making CEO remuneration the least of the concerns to be discussed in the upcoming AGM. In saying that, any proposed increase to CEO compensation will still be assessed on how reasonable it is based on performance and industry benchmarks.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 1 warning sign for MSC Industrial Direct that investors should think about before committing capital to this stock.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
