In 2013 Robert Sanchez was appointed CEO of Ryder System, Inc. (NYSE:R). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. 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. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Robert Sanchez's Compensation Compare With Similar Sized Companies?
At the time of writing our data says that Ryder System, Inc. has a market cap of US$3.1b, and is paying total annual CEO compensation of US$7.4m. (This number is for the twelve months until December 2018). While we always look at total compensation first, we note that the salary component is less, at US$820k. 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.
It would therefore appear that Ryder System, Inc. pays Robert Sanchez 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. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
You can see, below, how CEO compensation at Ryder System has changed over time.
Is Ryder System, Inc. Growing?
Ryder System, Inc. has increased its earnings per share (EPS) by an average of 26% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 16%.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. Shareholders might be interested in this free visualization of analyst forecasts.
Has Ryder System, Inc. Been A Good Investment?
With a three year total loss of 7.6%, Ryder System, Inc. would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
We compared total CEO remuneration at Ryder System, Inc. with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of that group.
However, the earnings per share growth over three years is certainly impressive. However, the returns to investors are far less impressive, over the same period. One might thus conclude that it would be better if the company waited until growth is reflected in the share price, before increasing CEO compensation. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Ryder System.
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.
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