Should Shareholders Worry About UniFirst Corporation's (NYSE:UNF) CEO Compensation Package?
The disappointing performance at UniFirst Corporation (NYSE:UNF) will make some shareholders rather disheartened. There is an opportunity for shareholders to influence management to turn the performance around by voting on resolutions such as executive remuneration at the AGM coming up on 10 January 2023. The data we gathered below shows that CEO compensation looks acceptable for now.
See our latest analysis for UniFirst
How Does Total Compensation For Steve Sintros Compare With Other Companies In The Industry?
According to our data, UniFirst Corporation has a market capitalization of US$3.5b, and paid its CEO total annual compensation worth US$3.3m over the year to August 2022. That is, the compensation was roughly the same as last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$850k.
In comparison with other companies in the American Commercial Services industry with market capitalizations ranging from US$2.0b to US$6.4b, the reported median CEO total compensation was US$5.3m. That is to say, Steve Sintros is paid under the industry median. Furthermore, Steve Sintros directly owns US$2.2m worth of shares in the company.
Component | 2022 | 2021 | Proportion (2022) |
Salary | US$850k | US$675k | 26% |
Other | US$2.5m | US$2.6m | 74% |
Total Compensation | US$3.3m | US$3.3m | 100% |
Speaking on an industry level, nearly 17% of total compensation represents salary, while the remainder of 83% is other remuneration. UniFirst pays out 26% of remuneration in the form of a salary, significantly higher than the industry average. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
UniFirst Corporation's Growth
Over the last three years, UniFirst Corporation has shrunk its earnings per share by 16% per year. In the last year, its revenue is up 9.6%.
Few shareholders would be pleased to read that EPS have declined. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 UniFirst Corporation Been A Good Investment?
Since shareholders would have lost about 11% over three years, some UniFirst Corporation investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
To Conclude...
Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.
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 1 warning sign for UniFirst that you should be aware of before investing.
Important note: UniFirst 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.
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.
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