How Should Investors Feel About Cintas Corporation's (NASDAQ:CTAS) CEO Pay?
In 2003 Scott Farmer was appointed CEO of Cintas Corporation (NASDAQ:CTAS). First, this article will compare CEO compensation with compensation at other large companies. 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. The aim of all this is to consider the appropriateness of CEO pay levels.
Check out our latest analysis for Cintas
How Does Scott Farmer's Compensation Compare With Similar Sized Companies?
According to our data, Cintas Corporation has a market capitalization of US$29b, and paid its CEO total annual compensation worth US$8.6m over the year to May 2019. While we always look at total compensation first, we note that the salary component is less, at US$1.2m. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. When we examined a group of companies with market caps over US$8.0b, we found that their median CEO total compensation was US$11m. Once you start looking at very large companies, you need to take a broader range, because there simply aren't that many of them.
That means Scott Farmer receives fairly typical remuneration for the CEO of a large company. While this data point isn't particularly informative alone, it gains more meaning when considered with business performance.
You can see, below, how CEO compensation at Cintas has changed over time.
Is Cintas Corporation Growing?
On average over the last three years, Cintas Corporation has grown earnings per share (EPS) by 27% each year (using a line of best fit). Its revenue is up 6.8% over last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's nice to see a little revenue growth, as this is consistent with healthy business conditions. Shareholders might be interested in this free visualization of analyst forecasts.
Has Cintas Corporation Been A Good Investment?
Boasting a total shareholder return of 147% over three years, Cintas Corporation has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
In Summary...
Scott Farmer is paid around what is normal the leaders of larger companies.
The company is growing earnings per share and total shareholder returns have been pleasing. Indeed, many might consider the pay rather modest, given the solid company performance! Whatever your view on compensation, you might want to check if insiders are buying or selling Cintas shares (free trial).
If you want to buy a stock that is better than Cintas, this free list of high return, low debt companies is a great place to look.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
