This is a personal question. Assuming you work for someone, or some company, my question is simple – What kind of raise did you get this year? And what is your track record of accomplishments over the past year that justified that raise?
Here is what the typical worker, and even executive and management have been experiencing:
“To a large extent, 3 percent pay raises have become the new norm in corporate America,” Sandra McLellan, North American Practice Leader for Towers Watson said in a statement. “We haven’t seen variation from this level for many years.”
Now we all know CEO's are worth much more than the average worker. So when I first saw this headline, ‘McDonald's CEO Easterbrook gets 18% raise', I was inclined to pass over it and go on to more important news items, like the most recent Kayne West rant.
But my eyebrow began to twitch. I had to go look at what McDonald's has done for investors to justify an 18% raise.
The new CEO, Steven Easterbrook, formerly the company's chief brand officer, took over in March of 2015 – less than a year ago.
A recent Marketwatch.com article by Tess Stynes states “During his tenure as CEO, Mr. Easterbrook has embarked on a turnaround effort to reinvigorate the company's weak sales.
In January, McDonald's posted its best U.S. quarterly sales in nearly four years, driven by all-day breakfast, in the strongest indication that Mr. Easterbrook's rebuilding initiatives have been gaining traction.”
Okay, but recent quarterly revenue of the company did not post best sales in four years. In fact, overall revenue is down 3.5% from a year ago. Earnings did show an improvement over the past two quarters, but they are merely back to the levels of a year and a half ago.
Did investors get a healthy dividend increase to reward them for staying with the stock, through three and a half years of sideways movement, meaning no net gain, in the stock price? The dividend increase, since Mr. Easterbrook became CEO, works out to 4.7%. Okay, that's something for investors.
Three and a half months ago the stock did finally jump 20%, but the annualized net gain since the start of the sideways trading range in 2011 works out to only 7.5% a year – less than the 8% annual general market gain assumed by many who do IRA/401k/pension retirement planning.
I didn't see any SEC filings over the past few years to indicate how much McDonald's stock he owns. He certainly hasn't bought any, nor has any other executive in McDonalds. Meanwhile, quite a number of VP's, officers, and other insiders have sold significant quantities of the stock (to be fair, this is often part of the compensation, but when absolutely no insiders are buying the stock of their company, it makes you wonder).
So he has not encouraged other insiders to take a chance on McDonald's future. He has not increased his holdings, if he has any, since becoming CEO. Revenue has decreased, earnings are back to year-ago levels, dividends have increased a whole 4.7%. But we can now buy an Egg McMuffin anytime of the day. That seems to be the primary accomplishment that justifies an 18% raise.
I used to like their coffee. It was Newman's Own Organic coffee. Now if Mr. Easterbrook brought that back, I'd tell the board to give him another 18%.
Of course, there's much more you need to know and many more stocks you can capitalize upon each and every day. To find out more, please click on the following link: www.markettamer.com/seasonal
By Gregg Harris, MarketTamer Chief Technical Strategist
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