We Discuss Why UniFirst Corporation's (NYSE:UNF) CEO Will Find It Hard To Get A Pay Rise From Shareholders This Year

Key Insights

• UniFirst to hold its Annual General Meeting on 10 January 2023
• CEO Steve Sintros's total compensation includes salary of US$850.0k
• Total compensation is 38% below industry average
• UniFirst's EPS grew by -16% over the past three years while total shareholder return over the past three years was -11%

Performance at UniFirst Corporation (NYSE:UNF) has not been particularly rosy recently and shareholders will likely be holding CEO Steve Sintros and the board accountable for this. There is an opportunity for shareholders to influence management to turn the performance around by voting on resolutions such as executive remuneration at the AGM coming up on 10 January 2023. From our analysis below, we think CEO compensation looks appropriate for now.

View our latest analysis for UniFirst

Comparing UniFirst Corporation's CEO Compensation With The Industry

Our data indicates that UniFirst Corporation has a market capitalization of US$3.5b, and total annual CEO compensation was reported as US$3.3m for the year to August 2022. That's mostly flat as compared to the prior year's compensation. We think total compensation is more important but our data shows that the CEO salary is lower, at US$850k.

For comparison, other companies in the American Commercial Services industry with market capitalizations ranging between US$2.0b and US$6.4b had a median total CEO compensation of US$5.3m. That is to say, Steve Sintros is paid under the industry median. Moreover, Steve Sintros also holds US$2.2m worth of UniFirst stock directly under their own name.

Component	2022	2021	Proportion (2022)
Salary	US$850k	US$675k	26%
Other	US$2.5m	US$2.6m	74%
Total Compensation	US$3.3m	US$3.3m	100%

Talking in terms of the industry, salary represented approximately 17% of total compensation out of all the companies we analyzed, while other remuneration made up 83% of the pie. UniFirst pays out 26% 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.

UniFirst Corporation's Growth

Over the last three years, UniFirst Corporation has shrunk its earnings per share by 16% per year. In the last year, its revenue is up 9.6%.

Few shareholders would be pleased to read that EPS have declined. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 UniFirst Corporation Been A Good Investment?

Since shareholders would have lost about 11% over three years, some UniFirst Corporation investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

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, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

CEO compensation can have a massive impact on performance, but it's just one element. We've identified 1 warning sign for UniFirst that investors should be aware of in a dynamic business environment.

Important note: UniFirst 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.

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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.