In 2017 John Cappasola was appointed CEO of Del Taco Restaurants, Inc. (NASDAQ:TACO). First, this article will compare CEO compensation with compensation at similar sized companies. 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.
How Does John Cappasola’s Compensation Compare With Similar Sized Companies?
Our data indicates that Del Taco Restaurants, Inc. is worth US$293m, and total annual CEO compensation was reported as US$3.0m for the year to January 2019. While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$561k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$100m to US$400m. The median total CEO compensation was US$1.1m.
Thus we can conclude that John Cappasola receives more in total compensation than the median of a group of companies in the same market, and of similar size to Del Taco Restaurants, Inc.. However, this doesn’t necessarily mean the pay is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
You can see, below, how CEO compensation at Del Taco Restaurants has changed over time.
Is Del Taco Restaurants, Inc. Growing?
On average over the last three years, Del Taco Restaurants, Inc. has shrunk earnings per share by 7.5% each year (measured with a line of best fit). In the last year, its revenue is up 3.7%.
Few shareholders would be pleased to read that earnings per share are lower over three years. And the modest revenue growth over 12 months isn’t much comfort against the reduced earnings per share. These factors suggest that the business performance wouldn’t really justify a high pay packet for the CEO. Shareholders might be interested in this free visualization of analyst forecasts.
Has Del Taco Restaurants, Inc. Been A Good Investment?
Since shareholders would have lost about 46% over three years, some Del Taco Restaurants, Inc. shareholders would surely be feeling negative emotions. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.
We examined the amount Del Taco Restaurants, Inc. pays its CEO, and compared it to the amount paid by similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.
We think many shareholders would be underwhelmed with the business growth over the last three years. Just as bad, share price gains for investors have failed to materialize, over the same period. In our opinion the CEO might be paid too generously! Shareholders may want to check for free if Del Taco Restaurants insiders are buying or selling shares.
If you want to buy a stock that is better than Del Taco Restaurants, this free list of high return, low debt companies is a great place to look.
If you spot an error that warrants correction, please contact the editor at email@example.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.
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