Yahoo Finance Should You Worry About Paychex, Inc.'s (NASDAQ:PAYX) CEO Pay?
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Marty Mucci has been the CEO of Paychex, Inc. (NASDAQ:PAYX) since 2010. This analysis aims first to contrast CEO compensation with other large companies. After that, we will consider the growth in the business. 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.
Check out our latest analysis for Paychex
How Does Marty Mucci's Compensation Compare With Similar Sized Companies?
At the time of writing our data says that Paychex, Inc. has a market cap of US$31b, and is paying total annual CEO compensation of US$6.7m. (This figure is for the year to May 2018). We think total compensation is more important but we note that the CEO salary is lower, at US$950k. We looked at a group of companies with market capitalizations over US$8.0b and the median CEO total compensation was US$12m. Once you start looking at very large companies, you need to take a broader range, because there simply aren't that many of them.
This would give shareholders a good impression of the company, since most large companies pay more, leaving less for shareholders. While this is a good thing, you'll need to understand the business better before you can form an opinion.
You can see a visual representation of the CEO compensation at Paychex, below.
Is Paychex, Inc. Growing?
Over the last three years Paychex, Inc. has grown its earnings per share (EPS) by an average of 11% per year (using a line of best fit). In the last year, its revenue is up 9.3%.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see modest revenue growth, suggesting the underlying business is healthy. Shareholders might be interested in this free visualization of analyst forecasts.
Has Paychex, Inc. Been A Good Investment?
Most shareholders would probably be pleased with Paychex, Inc. for providing a total return of 75% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
In Summary...
It appears that Paychex, Inc. remunerates its CEO below most large companies. Since the business is growing, many would argue this suggests the pay is modest. The strong history of shareholder returns might even have some thinking that Marty Mucci deserves a raise!
It's not often we see shareholders do so well, and yet the CEO is paid modestly. It would be even more positive if company insiders are buying shares. Whatever your view on compensation, you might want to check if insiders are buying or selling Paychex shares (free trial).
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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.
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. Thank you for reading.
