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David Overton became the CEO of The Cheesecake Factory Incorporated (NASDAQ:CAKE) in 1992. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.
See our latest analysis for Cheesecake Factory
How Does David Overton’s Compensation Compare With Similar Sized Companies?
Our data indicates that The Cheesecake Factory Incorporated is worth US$2.1b, and total annual CEO compensation is US$5.1m. (This figure is for the year to 2018). While we always look at total compensation first, we note that the salary component is less, at US$995k. We examined companies with market caps from US$1.0b to US$3.2b, and discovered that the median CEO compensation of that group was US$3.4m.
As you can see, David Overton is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean The Cheesecake Factory Incorporated is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance.
You can see, below, how CEO compensation at Cheesecake Factory has changed over time.
Is The Cheesecake Factory Incorporated Growing?
On average over the last three years, The Cheesecake Factory Incorporated has grown earnings per share (EPS) by 9.9% each year (using a line of best fit). In the last year, its revenue is up 2.0%.
I would argue that the improvement in revenue isn’t particularly impressive, but the modest improvement in EPS is good. Considering these factors I’d say performance has been pretty decent, though not amazing. Shareholders might be interested in this free visualization of analyst forecasts.
Has The Cheesecake Factory Incorporated Been A Good Investment?
With a total shareholder return of 0.4% over three years, The Cheesecake Factory Incorporated has done okay by shareholders. 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…
We examined the amount The Cheesecake Factory Incorporated pays its CEO, and compared it to the amount paid by similar sized companies. Our data suggests that it pays above the median CEO pay within that group.