Our Take On Patterson Companies' (NASDAQ:PDCO) CEO Salary
Mark Walchirk became the CEO of Patterson Companies, Inc. (NASDAQ:PDCO) in 2017, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
View our latest analysis for Patterson Companies
Comparing Patterson Companies, Inc.'s CEO Compensation With the industry
Our data indicates that Patterson Companies, Inc. has a market capitalization of US$2.6b, and total annual CEO compensation was reported as US$5.9m for the year to April 2020. Notably, that's an increase of 33% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$871k.
On examining similar-sized companies in the industry with market capitalizations between US$2.0b and US$6.4b, we discovered that the median CEO total compensation of that group was US$5.9m. From this we gather that Mark Walchirk is paid around the median for CEOs in the industry. What's more, Mark Walchirk holds US$1.7m worth of shares in the company in their own name.
Component | 2020 | 2019 | Proportion (2020) |
Salary | US$871k | US$850k | 15% |
Other | US$5.0m | US$3.6m | 85% |
Total Compensation | US$5.9m | US$4.4m | 100% |
On an industry level, roughly 16% of total compensation represents salary and 84% is other remuneration. There isn't a significant difference between Patterson Companies and the broader market, in terms of salary allocation in the overall compensation package. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
Patterson Companies, Inc.'s Growth
Over the last three years, Patterson Companies, Inc. has shrunk its earnings per share by 80% per year. In the last year, its revenue is down 1.5%.
The decline in earnings is a bit concerning. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Patterson Companies, Inc. Been A Good Investment?
Given the total shareholder loss of 13% over three years, many shareholders in Patterson Companies, Inc. are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
In Summary...
As we noted earlier, Patterson Companies pays its CEO in line with similar-sized companies belonging to the same industry. On the other hand, earnings growth and total shareholder return have been negative for the last three years. We'd stop short of saying compensation is inappropriate, but we would understand if shareholders had questions regarding a future raise.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 3 warning signs for Patterson Companies (1 makes us a bit uncomfortable!) that you should be aware of before investing here.
Switching gears from Patterson Companies, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
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. 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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