Randy Garutti has been the CEO of Shake Shack Inc (NYSE:SHAK) since 2012. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we’ll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Randy Garutti’s Compensation Compare With Similar Sized Companies?
Our data indicates that Shake Shack Inc is worth US$1.9b, and total annual CEO compensation is US$1.1m. That’s below the compensation, last year. We examined companies with market caps from US$1.0b to US$3.2b, and discovered that the median CEO compensation of that group was US$3.6m.
This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. However, before we heap on the praise, we should delve deeper to understand business performance.
You can see, below, how CEO compensation at Shake Shack has changed over time.
Is Shake Shack Inc Growing?
Over the last three years Shake Shack Inc has grown its earnings per share (EPS) by an average of 37% per year. Its revenue is up 28% over last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It’s great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly.
You might want to check this free visual report on analyst forecasts for future earnings.
Has Shake Shack Inc Been A Good Investment?
With a total shareholder return of 16% over three years, Shake Shack Inc shareholders would, in general, be reasonably content. But they probably don’t want to see the CEO paid more than is normal for companies around the same size.
It looks like Shake Shack Inc pays its CEO less than similar sized companies. Since the business is growing, many would argue this suggest the pay is modest. While some might be keen on seeing higher returns, our short analysis has not produced any evidence to suggest Randy Garutti is overcompensated.
It’s great to see a company that pays its CEO reasonably, even while growing. But for me, it’s even better if insiders are also buying shares with their own cold, hard, cash.
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 email@example.com.