Stock Analysis

We Think Shareholders Are Less Likely To Approve A Large Pay Rise For Automatic Data Processing, Inc.'s (NASDAQ:ADP) CEO For Now

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Under the guidance of CEO Carlos Rodriguez, Automatic Data Processing, Inc. (NASDAQ:ADP) has performed reasonably well recently. As shareholders go into the upcoming AGM on 10 November 2021, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. However, some shareholders may still want to keep CEO compensation within reason.

Check out our latest analysis for Automatic Data Processing

How Does Total Compensation For Carlos Rodriguez Compare With Other Companies In The Industry?

Our data indicates that Automatic Data Processing, Inc. has a market capitalization of US$95b, and total annual CEO compensation was reported as US$17m for the year to June 2021. That's slightly lower by 3.7% over the previous year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$942k.

On comparing similar companies in the industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$9.6m. Accordingly, our analysis reveals that Automatic Data Processing, Inc. pays Carlos Rodriguez north of the industry median. What's more, Carlos Rodriguez holds US$26m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component20212020Proportion (2021)
Salary US$942k US$989k 6%
Other US$16m US$17m 94%
Total CompensationUS$17m US$18m100%

Talking in terms of the industry, salary represented approximately 18% of total compensation out of all the companies we analyzed, while other remuneration made up 82% of the pie. In Automatic Data Processing's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

NasdaqGS:ADP CEO Compensation November 4th 2021

Automatic Data Processing, Inc.'s Growth

Automatic Data Processing, Inc. has seen its earnings per share (EPS) increase by 12% a year over the past three years. In the last year, its revenue is up 5.5%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's nice to see revenue heading northwards, as this is consistent with healthy business conditions. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Automatic Data Processing, Inc. Been A Good Investment?

Most shareholders would probably be pleased with Automatic Data Processing, Inc. for providing a total return of 62% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

The company's decent performance might have made most shareholders happy, possibly making CEO remuneration the least of the concerns to be discussed in the upcoming AGM. However, any decision to raise CEO pay might be met with some objections from the shareholders given that the CEO is already paid higher than the industry average.

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. We did our research and spotted 1 warning sign for Automatic Data Processing that investors should look into moving forward.

Switching gears from Automatic Data Processing, 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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