Is MSC Industrial Direct Co., Inc. (NYSE:MSM) Excessively Paying Its CEO?

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In 2013 Erik Gershwind was appointed CEO of MSC Industrial Direct Co., Inc. (NYSE:MSM). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we’ll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.

See our latest analysis for MSC Industrial Direct

How Does Erik Gershwind’s Compensation Compare With Similar Sized Companies?

Our data indicates that MSC Industrial Direct Co., Inc. is worth US$4.1b, and total annual CEO compensation is US$4.5m. (This is based on the year to September 2018). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$741k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$2.0b to US$6.4b. The median total CEO compensation was US$5.2m.

So Erik Gershwind is paid around the average of the companies we looked at. While this data point isn’t particularly informative alone, it gains more meaning when considered with business performance.

You can see, below, how CEO compensation at MSC Industrial Direct has changed over time.

NYSE:MSM CEO Compensation, July 8th 2019
NYSE:MSM CEO Compensation, July 8th 2019

Is MSC Industrial Direct Co., Inc. Growing?

MSC Industrial Direct Co., Inc. has increased its earnings per share (EPS) by an average of 18% a year, over the last three years (using a line of best fit). Its revenue is up 9.4% over last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. It’s nice to see a little revenue growth, as this is consistent with healthy business conditions.

Has MSC Industrial Direct Co., Inc. Been A Good Investment?

MSC Industrial Direct Co., Inc. has generated a total shareholder return of 8.8% over three years, so most shareholders wouldn’t be too disappointed. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary…

Remuneration for Erik Gershwind is close enough to the median pay for a CEO of a similar sized company .

Shareholder returns could be better but shareholders would be pleased with the positive EPS growth. So upon reflection one could argue that the CEO pay is quite reasonable. Whatever your view on compensation, you might want to check if insiders are buying or selling MSC Industrial Direct 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.