The Toro Company's (NYSE:TTC) CEO Might Not Expect Shareholders To Be So Generous This Year

Key Insights

• Toro to hold its Annual General Meeting on 19th of March
• CEO Rick Olson's total compensation includes salary of US$1.13m
• The overall pay is comparable to the industry average
• Toro's three-year loss to shareholders was 11% while its EPS was down 7.1% over the past three years

The results at The Toro Company (NYSE:TTC) have been quite disappointing recently and CEO Rick Olson bears some responsibility for this. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 19th of March. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. From our analysis, we think CEO compensation may need a review in light of the recent performance.

View our latest analysis for Toro

Comparing The Toro Company's CEO Compensation With 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 this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued 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. So it looks like Toro compensates Rick Olson in line with the median for the industry. What's more, Rick Olson holds US$3.2m worth of shares in the company in their own name.

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. In Toro's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

The Toro Company's Growth

The Toro Company has reduced its earnings per share by 7.1% a year over the last three years. It saw its revenue drop 6.8% over the last year.

Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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.

Has The Toro Company Been A Good Investment?

Since shareholders would have lost about 11% over three years, some The Toro Company investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 4 warning signs for Toro that you should be aware of before investing.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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.