Carlos Rodriguez has been the CEO of Automatic Data Processing, Inc. (NASDAQ:ADP) since 2011. This analysis aims first to contrast CEO compensation with other large companies. Then we’ll look at a snap shot of the business growth. 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.
How Does Carlos Rodriguez’s Compensation Compare With Similar Sized Companies?
Our data indicates that Automatic Data Processing, Inc. is worth US$77b, and total annual CEO compensation was reported as US$19m for the year to June 2019. We think total compensation is more important but we note that the CEO salary is lower, at US$1.1m. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. We looked at a group of companies with market capitalizations over US$8.0b and the median CEO total compensation was US$11m. (We took a wide range because the CEOs of massive companies tend to be paid similar amounts – even though some are quite a bit bigger than others).
Thus we can conclude that Carlos Rodriguez receives more in total compensation than the median of a group of large companies in the same market as Automatic Data Processing, Inc.. However, this doesn’t necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.
The graphic below shows how CEO compensation at Automatic Data Processing has changed from year to year.
Is Automatic Data Processing, Inc. Growing?
Automatic Data Processing, Inc. has increased its earnings per share (EPS) by an average of 12% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 5.9%.
This shows that the company has improved itself over the last few years. Good news for shareholders. It’s good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. It could be important to check this free visual depiction of what analysts expect for the future.
Has Automatic Data Processing, Inc. Been A Good Investment?
I think that the total shareholder return of 82%, over three years, would leave most Automatic Data Processing, Inc. shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
We examined the amount Automatic Data Processing, Inc. pays its CEO, and compared it to the amount paid by other large companies. Our data suggests that it pays above the median CEO pay within that group.
However we must not forget that the EPS growth has been very strong over three years. In addition, shareholders have done well over the same time period. Considering this fine result for shareholders, we daresay the CEO compensation might be apt. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Automatic Data Processing.
If you want to buy a stock that is better than Automatic Data Processing, this free list of high return, low debt companies is a great place to look.
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