Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
Frederick Smith became the CEO of FedEx Corporation (NYSE:FDX) in 1998. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Frederick Smith’s Compensation Compare With Similar Sized Companies?
Our data indicates that FedEx Corporation is worth US$43b, and total annual CEO compensation is US$17m. (This number is for the twelve months until May 2018). We think total compensation is more important but we note that the CEO salary is lower, at US$1.3m. We looked at a group of companies with market capitalizations over US$8.0b and the median CEO total compensation was US$11m. There aren’t very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.
It would therefore appear that FedEx Corporation pays Frederick Smith more than the median CEO remuneration at large companies, in the same market. However, this fact alone doesn’t mean the remuneration 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 a visual representation of the CEO compensation at FedEx, below.
Is FedEx Corporation Growing?
Over the last three years FedEx Corporation has grown its earnings per share (EPS) by an average of 42% per year (using a line of best fit). It achieved revenue growth of 8.4% over the last year.
This demonstrates that the company has been improving recently. A good result. It’s good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. It could be important to check this free visual depiction of what analysts expect for the future.
Has FedEx Corporation Been A Good Investment?
FedEx Corporation has not done too badly by shareholders, with a total return of 4.2%, over three years. But they would probably prefer not to see CEO compensation far in excess of the median.
We compared total CEO remuneration at FedEx Corporation with the amount paid at other large companies. Our data suggests that it pays above the median CEO pay within that group.
However, the earnings per share growth over three years is certainly impressive. Looking at the same time period, we think that the shareholder returns are respectable. You might wish to research management further, but on this analysis, considering the EPS growth, we wouldn’t call the CEO pay problematic. Whatever your view on compensation, you might want to check if insiders are buying or selling FedEx shares (free trial).
If you want to buy a stock that is better than FedEx, this free list of high return, low debt companies is a great place to look.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Thank you for reading.