How Should Investors React To Republic Services' (NYSE:RSG) CEO Pay?

By
Simply Wall St
Published
November 30, 2020
NYSE:RSG

Don Slager became the CEO of Republic Services, Inc. (NYSE:RSG) in 2011, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

See our latest analysis for Republic Services

Comparing Republic Services, Inc.'s CEO Compensation With the industry

At the time of writing, our data shows that Republic Services, Inc. has a market capitalization of US$31b, and reported total annual CEO compensation of US$13m for the year to December 2019. That's a modest increase of 6.5% on the prior year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.2m.

In comparison with other companies in the industry with market capitalizations over US$8.0b , the reported median total CEO compensation was US$9.0m. Hence, we can conclude that Don Slager is remunerated higher than the industry median. What's more, Don Slager holds US$33m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component20192018Proportion (2019)
Salary US$1.2m US$1.1m 9%
Other US$11m US$11m 91%
Total CompensationUS$13m US$12m100%

On an industry level, around 23% of total compensation represents salary and 77% is other remuneration. It's interesting to note that Republic Services allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

ceo-compensation
NYSE:RSG CEO Compensation November 30th 2020

A Look at Republic Services, Inc.'s Growth Numbers

Republic Services, Inc.'s earnings per share (EPS) grew 10% per year over the last three years. The trailing twelve months of revenue was pretty much the same as the prior period.

Shareholders would be glad to know that the company has improved itself over the last few years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. 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 Republic Services, Inc. Been A Good Investment?

We think that the total shareholder return of 60%, over three years, would leave most Republic Services, Inc. shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

As previously discussed, Don is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. Importantly though, EPS growth and shareholder returns are very impressive over the last three years. As a result of the excellent all-round performance of the company, we believe CEO compensation is fair. And given most shareholders are probably very happy with recent returns, they might even think that Don deserves a raise!

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 2 warning signs for Republic Services that you should be aware of before investing.

Switching gears from Republic Services, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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. 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.
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