Shareholders May Be Wary Of Increasing The Toro Company's (NYSE:TTC) CEO Compensation Package
Key Insights
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Toro will host its Annual General Meeting on 19th of March
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Total pay for CEO Rick Olson includes US$1.13m salary
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Total compensation is similar to the industry average
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Toro's EPS declined by 7.1% over the past three years while total shareholder loss over the past three years was 11%
Shareholders will probably not be too impressed with the underwhelming results at The Toro Company (NYSE:TTC) recently. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 19th of March. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. From our analysis, we think CEO compensation may need a review in light of the recent performance.
Check out our latest analysis for Toro
How Does Total Compensation For Rick Olson Compare With Other Companies In The Industry?
Our data indicates that The Toro Company has a market capitalization of US$9.3b, and total annual CEO compensation was reported as US$9.0m for the year to October 2023. Notably, that's an increase of 23% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.1m.
On examining similar-sized companies in the American Machinery industry with market capitalizations between US$4.0b and US$12b, we discovered that the median CEO total compensation of that group was US$8.2m. This suggests that Toro remunerates its CEO largely in line with the industry average. Furthermore, Rick Olson directly owns US$3.2m worth of shares in the company.
| Component | 2023 | 2022 | Proportion (2023) |
| Salary | US$1.1m | US$1.1m | 13% |
| Other | US$7.9m | US$6.2m | 87% |
| Total Compensation | US$9.0m | US$7.3m | 100% |
Talking in terms of the industry, salary represented approximately 16% of total compensation out of all the companies we analyzed, while other remuneration made up 84% of the pie. Toro sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
A Look at The Toro Company's Growth Numbers
The Toro Company has reduced its earnings per share by 7.1% a year over the last three years. In the last year, its revenue is down 6.8%.
The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.