Yahoo Finance Group 1 Automotive, Inc.'s (NYSE:GPI) CEO Looks Like They Deserve Their Pay Packet
The performance at Group 1 Automotive, Inc. (NYSE:GPI) has been quite strong recently and CEO Earl Hesterberg has played a role in it. The pleasing results would be something shareholders would keep in mind at the upcoming AGM on 12 May 2021. The focus will probably be on the future company strategy as shareholders cast their votes on resolutions such as executive remuneration and other matters. We think the CEO has done a pretty decent job and we discuss why the CEO compensation is appropriate.
See our latest analysis for Group 1 Automotive
Comparing Group 1 Automotive, Inc.'s CEO Compensation With the industry
At the time of writing, our data shows that Group 1 Automotive, Inc. has a market capitalization of US$2.9b, and reported total annual CEO compensation of US$7.3m for the year to December 2020. That's a slight decrease of 7.9% on the prior year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$900k.
On examining similar-sized companies in the industry with market capitalizations between US$2.0b and US$6.4b, we discovered that the median CEO total compensation of that group was US$7.8m. This suggests that Group 1 Automotive remunerates its CEO largely in line with the industry average. What's more, Earl Hesterberg holds US$46m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Component | 2020 | 2019 | Proportion (2020) |
Salary | US$900k | US$1.2m | 12% |
Other | US$6.4m | US$6.8m | 88% |
Total Compensation | US$7.3m | US$7.9m | 100% |
On an industry level, roughly 15% of total compensation represents salary and 85% is other remuneration. Group 1 Automotive pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
Group 1 Automotive, Inc.'s Growth
Group 1 Automotive, Inc. has seen its earnings per share (EPS) increase by 24% a year over the past three years. Its revenue is down 6.3% over the previous year.
Shareholders would be glad to know that the company has improved itself over the last few years. It's always a tough situation when revenues are not growing, but ultimately profits are more important. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Group 1 Automotive, Inc. Been A Good Investment?
We think that the total shareholder return of 155%, over three years, would leave most Group 1 Automotive, Inc. shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
To Conclude...
Seeing that the company has put in a relatively good performance, the CEO remuneration policy may not be the focus at the AGM. However, investors will get the chance to engage on key strategic initiatives and future growth opportunities for the company and set their longer-term expectations.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We did our research and spotted 2 warning signs for Group 1 Automotive that investors should look into moving forward.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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. 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.
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