Stock Analysis

Here's Why Fastenal Company's (NASDAQ:FAST) CEO May Deserve A Raise

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Key Insights

  • Fastenal's Annual General Meeting to take place on 25th of April
  • Total pay for CEO Dan Florness includes US$700.0k salary
  • Total compensation is 61% below industry average
  • Fastenal's total shareholder return over the past three years was 41% while its EPS grew by 10% over the past three years

Shareholders will be pleased by the impressive results for Fastenal Company (NASDAQ:FAST) recently and CEO Dan Florness has played a key role. At the upcoming AGM on 25th of April, they would be interested to hear about the company strategy going forward and get a chance to cast their votes on resolutions such as executive remuneration and other company matters. Let's take a look at why we think the CEO has done a good job and we'll present the case for a bump in pay.

See our latest analysis for Fastenal

Comparing Fastenal Company's CEO Compensation With The Industry

At the time of writing, our data shows that Fastenal Company has a market capitalization of US$39b, and reported total annual CEO compensation of US$3.1m for the year to December 2023. That's a notable decrease of 44% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$700k.

On comparing similar companies in the American Trade Distributors industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$7.9m. In other words, Fastenal pays its CEO lower than the industry median. Moreover, Dan Florness also holds US$21m worth of Fastenal stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20232022Proportion (2023)
Salary US$700k US$700k 23%
Other US$2.4m US$4.7m 77%
Total CompensationUS$3.1m US$5.4m100%

On an industry level, around 17% of total compensation represents salary and 83% is other remuneration. Fastenal pays out 23% of remuneration in the form of a salary, significantly higher than the industry average. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

NasdaqGS:FAST CEO Compensation April 19th 2024

Fastenal Company's Growth

Fastenal Company's earnings per share (EPS) grew 10% per year over the last three years. It achieved revenue growth of 3.5% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Fastenal Company Been A Good Investment?

We think that the total shareholder return of 41%, over three years, would leave most Fastenal Company shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

To Conclude...

The company's solid performance might have made most shareholders happy, possibly making CEO remuneration the least of the matters to be discussed in the AGM. In fact, strategic decisions that could impact the future of the business might be a far more interesting topic for investors as it would help them set their longer-term expectations.

Whatever your view on compensation, you might want to check if insiders are buying or selling Fastenal shares (free trial).

Important note: Fastenal is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

Valuation is complex, but we're helping make it simple.

Find out whether Fastenal is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.