Yahoo Finance Is KAR Auction Services, Inc.'s (NYSE:KAR) CEO Being Overpaid?
Jim Hallett became the CEO of KAR Auction Services, Inc. (NYSE:KAR) in 2009. 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. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.
See our latest analysis for KAR Auction Services
How Does Jim Hallett's Compensation Compare With Similar Sized Companies?
Our data indicates that KAR Auction Services, Inc. is worth US$1.7b, and total annual CEO compensation was reported as US$6.1m for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$975k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$1.0b to US$3.2b. The median total CEO compensation was US$4.8m.
Pay mix tells us a lot about how a company functions versus the wider industry, and it's no different in the case of KAR Auction Services. Speaking on an industry level, we can see that nearly 22% of total compensation represents salary, while the remainder of 78% is other remuneration. KAR Auction Services does not set aside a larger portion of remuneration in the form of salary, maintaining the same rate as the wider market.
So Jim Hallett is paid around the average of the companies we looked at. While this data point isn't particularly informative alone, it gains more meaning when considered with business performance. You can see, below, how CEO compensation at KAR Auction Services has changed over time.
Is KAR Auction Services, Inc. Growing?
Over the last three years, KAR Auction Services, Inc. has not seen its earnings per share change much, though there is a positive trend. In the last year, its revenue is up 14%.
I think the revenue growth is good. And the improvement in earnings per share is modest but respectable. Although we'll stop short of calling the stock a top performer, we think the company has potential. It could be important to check this free visual depiction of what analysts expect for the future.
Has KAR Auction Services, Inc. Been A Good Investment?
Since shareholders would have lost about 9.7% over three years, some KAR Auction Services, Inc. shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
In Summary...
Jim Hallett is paid around what is normal for the leaders of comparable size companies.
We would like to see somewhat stronger per share growth. And shareholder returns have been disappointing over the last three years. So many would argue that the CEO is certainly not underpaid. CEO compensation is an important area to keep your eyes on, but we've also identified 4 warning signs for KAR Auction Services (1 makes us a bit uncomfortable!) that you should be aware of before investing here.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
