Shareholders May Be Wary Of Increasing The Toro Company's (NYSE:TTC) CEO Compensation Package
Key Insights
Toro will host its Annual General Meeting on 19th of March
Total pay for CEO Rick Olson includes US$1.13m salary
Total compensation is similar to the industry average
Toro's EPS declined by 7.1% over the past three years while total shareholder loss over the past three years was 11%
Shareholders will probably not be too impressed with the underwhelming results at The Toro Company (NYSE:TTC) recently. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 19th of March. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. From our analysis, we think CEO compensation may need a review in light of the recent performance.
Check out our latest analysis for Toro
How Does Total Compensation For Rick Olson Compare With Other Companies In The Industry?
Our data indicates that The Toro Company has a market capitalization of US$9.3b, and total annual CEO compensation was reported as US$9.0m for the year to October 2023. Notably, that's an increase of 23% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.1m.
On examining similar-sized companies in the American Machinery industry with market capitalizations between US$4.0b and US$12b, we discovered that the median CEO total compensation of that group was US$8.2m. This suggests that Toro remunerates its CEO largely in line with the industry average. Furthermore, Rick Olson directly owns US$3.2m worth of shares in the company.
Component | 2023 | 2022 | Proportion (2023) |
Salary | US$1.1m | US$1.1m | 13% |
Other | US$7.9m | US$6.2m | 87% |
Total Compensation | US$9.0m | US$7.3m | 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. Toro sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
A Look at The Toro Company's Growth Numbers
The Toro Company has reduced its earnings per share by 7.1% a year over the last three years. In the last year, its revenue is down 6.8%.
The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has The Toro Company Been A Good Investment?
Given the total shareholder loss of 11% over three years, many shareholders in The Toro Company are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
In Summary...
Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 4 warning signs for Toro that investors should look into moving forward.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
