Key Insights

• Darden Restaurants will host its Annual General Meeting on 18th of September
• CEO Rick Cardenas' total compensation includes salary of US$1.08m
• The overall pay is comparable to the industry average
• Darden Restaurants' total shareholder return over the past three years was 17% while its EPS grew by 21% over the past three years

CEO Rick Cardenas has done a decent job of delivering relatively good performance at Darden Restaurants, Inc. (NYSE:DRI) recently. As shareholders go into the upcoming AGM on 18th of September, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. Here is our take on why we think the CEO compensation looks appropriate.

Comparing Darden Restaurants, Inc.'s CEO Compensation With The Industry

Our data indicates that Darden Restaurants, Inc. has a market capitalization of US$19b, and total annual CEO compensation was reported as US$12m for the year to May 2024. That's a notable increase of 41% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.1m.

On comparing similar companies in the American Hospitality industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$13m. From this we gather that Rick Cardenas is paid around the median for CEOs in the industry. What's more, Rick Cardenas holds US$9.7m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

On an industry level, around 18% of total compensation represents salary and 82% is other remuneration. It's interesting to note that Darden Restaurants allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Darden Restaurants, Inc.'s Growth Numbers

Over the past three years, Darden Restaurants, Inc. has seen its earnings per share (EPS) grow by 21% per year. Its revenue is up 8.6% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see modest revenue growth, suggesting the underlying business is healthy. 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 Darden Restaurants, Inc. Been A Good Investment?

Darden Restaurants, Inc. has generated a total shareholder return of 17% over three years, so most shareholders would be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this 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. Despite the pleasing results, we still think that any proposed increases to CEO compensation will be examined based on a case by case basis and linked to performance outcomes.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 3 warning signs for Darden Restaurants that investors should think about before committing capital to this stock.

Important note: Darden Restaurants 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.