Shareholders Will Probably Hold Off On Increasing Jack in the Box Inc.'s (NASDAQ:JACK) CEO Compensation For The Time Being
Key Insights
Jack in the Box to hold its Annual General Meeting on 1st of March
CEO Darin Harris' total compensation includes salary of US$901.5k
Total compensation is similar to the industry average
Jack in the Box's EPS grew by 1.0% over the past three years while total shareholder loss over the past three years was 26%
The underwhelming share price performance of Jack in the Box Inc. (NASDAQ:JACK) in the past three years would have disappointed many shareholders. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 1st of March. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.
See our latest analysis for Jack in the Box
Comparing Jack in the Box Inc.'s CEO Compensation With The Industry
According to our data, Jack in the Box Inc. has a market capitalization of US$1.4b, and paid its CEO total annual compensation worth US$5.3m over the year to October 2023. That's a notable increase of 16% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$902k.
In comparison with other companies in the American Hospitality industry with market capitalizations ranging from US$1.0b to US$3.2b, the reported median CEO total compensation was US$6.2m. So it looks like Jack in the Box compensates Darin Harris in line with the median for the industry. Moreover, Darin Harris also holds US$2.3m worth of Jack in the Box stock directly under their own name.
Component | 2023 | 2022 | Proportion (2023) |
Salary | US$902k | US$869k | 17% |
Other | US$4.4m | US$3.8m | 83% |
Total Compensation | US$5.3m | US$4.6m | 100% |
On an industry level, around 20% of total compensation represents salary and 80% is other remuneration. Jack in the Box 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.
Jack in the Box Inc.'s Growth
Over the past three years, Jack in the Box Inc. has seen its earnings per share (EPS) grow by 1.0% per year. In the last year, its revenue changed by just 0.2%.
We'd prefer higher revenue growth, but it is good to see modest EPS growth. Considering these factors we'd say performance has been pretty decent, though not amazing. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Jack in the Box Inc. Been A Good Investment?
Given the total shareholder loss of 26% over three years, many shareholders in Jack in the Box Inc. are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be less generous with CEO compensation.
In Summary...
The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. Shareholders would be keen to know what's holding the stock back when earnings have grown. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.
We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 3 warning signs for Jack in the Box you should be aware of, and 1 of them is a bit concerning.
Important note: Jack in the Box is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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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.
