Dan Florness became the CEO of Fastenal Company (NASDAQ:FAST) in 2016. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. Next, we’ll consider growth that the business demonstrates. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.

How Does Dan Florness’s Compensation Compare With Similar Sized Companies?

Our data indicates that Fastenal Company is worth US$15b, and total annual CEO compensation is US$2.0m. (This figure is for the year to 2017). While we always look at total compensation first, we note that the salary component is less, at US$593k. We took a group of companies with market capitalizations over US$8.0b, and calculated the median CEO compensation to be US$11m. (We took a wide range because the CEOs of massive companies tend to be paid similar amounts – even though some are quite a bit bigger than others).

A first glance this seems like a real positive for shareholders, since Dan Florness is paid less than the average compensation paid by other large companies. While this is a good thing, you’ll need to understand the business better before you can form an opinion.

You can see, below, how CEO compensation at Fastenal has changed over time.

NasdaqGS:FAST CEO Compensation January 6th 19
NasdaqGS:FAST CEO Compensation January 6th 19

Is Fastenal Company Growing?

Over the last three years Fastenal Company has grown its earnings per share (EPS) by an average of 12% per year. Its revenue is up 13% over last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business.

Has Fastenal Company Been A Good Investment?

I think that the total shareholder return of 46%, over three years, would leave most Fastenal Company shareholders smiling. So they may not be at all concerned if the CEO is paid more than is normal for companies around the same size.

In Summary…

It looks like Fastenal Company pays its CEO less than the average at large companies. Considering the underlying business is growing earnings, this would suggest the pay is modest. The strong history of shareholder returns might even have some thinking that Dan Florness deserves a raise!

Most shareholders like to see a modestly paid CEO combined with strong performance by the company. But it is even better if company insiders are also buying shares with their own money. So you may want to check if insiders are buying Fastenal shares with their own money (free access).