Stock Analysis

We Take A Look At Why The Toro Company's (NYSE:TTC) CEO Has Earned Their Pay Packet

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Key Insights

  • Toro's Annual General Meeting to take place on 21st of March
  • CEO Rick Olson's total compensation includes salary of US$1.09m
  • The total compensation is similar to the average for the industry
  • Toro's EPS grew by 20% over the past three years while total shareholder return over the past three years was 103%

The performance at The Toro Company (NYSE:TTC) has been quite strong recently and CEO Rick Olson has played a role in it. Shareholders will have this at the front of their minds in the upcoming AGM on 21st of March. It is likely that the focus will be on company strategy going forward as shareholders hear from the board and cast their votes on resolutions such as executive remuneration and other matters. Here is our take on why we think CEO compensation is not extravagant.

Check out our latest analysis for Toro

Comparing The Toro Company's CEO Compensation With The Industry

According to our data, The Toro Company has a market capitalization of US$12b, and paid its CEO total annual compensation worth US$7.3m over the year to October 2022. We note that's a decrease of 15% compared to last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.1m.

In comparison with other companies in the American Machinery industry with market capitalizations over US$8.0b, the reported median total CEO compensation was US$10m. This suggests that Toro remunerates its CEO largely in line with the industry average. Moreover, Rick Olson also holds US$3.8m worth of Toro stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20222021Proportion (2022)
Salary US$1.1m US$1.0m 15%
Other US$6.2m US$7.6m 85%
Total CompensationUS$7.3m US$8.6m100%

On an industry level, around 16% of total compensation represents salary and 84% is other remuneration. There isn't a significant difference between Toro and the broader market, in terms of salary allocation in the overall compensation package. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

NYSE:TTC CEO Compensation March 15th 2023

The Toro Company's Growth

Over the past three years, The Toro Company has seen its earnings per share (EPS) grow by 20% per year. Its revenue is up 18% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has The Toro Company Been A Good Investment?

Most shareholders would probably be pleased with The Toro Company for providing a total return of 103% over three years. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

Given the company's decent performance, the CEO remuneration policy might not be shareholders' central point of focus in the AGM. However, investors will get the chance to engage on key strategic initiatives and future growth opportunities for the company and set their longer-term expectations.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 2 warning signs for Toro that investors should think about before committing capital to this stock.

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.

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

Find out whether Toro 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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