In 1999 John Derham Cato was appointed CEO of The Cato Corporation (NYSE:CATO). 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. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.
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How Does John Derham Cato’s Compensation Compare With Similar Sized Companies?
According to our data, The Cato Corporation has a market capitalization of US$361m, and pays its CEO total annual compensation worth US$2.8m. (This is based on the year to 2018). While we always look at total compensation first, we note that the salary component is less, at US$1.2m. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$200m to US$800m. The median total CEO compensation was US$1.5m.
As you can see, John Derham Cato is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean The Cato Corporation is paying too much. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
You can see a visual representation of the CEO compensation at Cato, below.
Is The Cato Corporation Growing?
The Cato Corporation has reduced its earnings per share by an average of 59% a year, over the last three years. In the last year, its revenue changed by just -0.8%.
Unfortunately, earnings per share have trended lower over the last three years. And the flat revenue hardly impresses. These factors suggest that the business performance wouldn’t really justify a high pay packet for the CEO.
Shareholders might be interested in this free visualization of analyst forecasts. .
Has The Cato Corporation Been A Good Investment?
Given the total loss of 53% over three years, many shareholders in The Cato Corporation are probably rather dissatisfied, to say the least. It therefore might be upsetting for shareholders if the CEO were paid generously.
We compared total CEO remuneration at The Cato Corporation 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.
Neither earnings per share nor revenue have been growing sufficiently fast to impress us, over the last three years.
Arguably worse, investors are without a positive return for the last three years. This analysis suggests to us that the CEO is paid too generously! So you may want to check if insiders are buying Cato shares with their own money (free access).
Or you might prefer this data-rich interactive visualization of historic revenue and earnings.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.