Yahoo Finance Shareholders May Be Wary Of Increasing CarMax, Inc.'s (NYSE:KMX) CEO Compensation Package
Key Insights
CarMax's Annual General Meeting to take place on 25th of June
CEO Bill Nash's total compensation includes salary of US$1.24m
The total compensation is similar to the average for the industry
CarMax's EPS declined by 13% over the past three years while total shareholder loss over the past three years was 39%
CarMax, Inc. (NYSE:KMX) has not performed well recently and CEO Bill Nash will probably need to up their game. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 25th of June. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. From our analysis, we think CEO compensation may need a review in light of the recent performance.
See our latest analysis for CarMax
How Does Total Compensation For Bill Nash Compare With Other Companies In The Industry?
At the time of writing, our data shows that CarMax, Inc. has a market capitalization of US$11b, and reported total annual CEO compensation of US$12m for the year to February 2024. That's a modest increase of 5.8% on the prior year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.2m.
In comparison with other companies in the American Specialty Retail industry with market capitalizations over US$8.0b, the reported median total CEO compensation was US$14m. This suggests that CarMax remunerates its CEO largely in line with the industry average. Moreover, Bill Nash also holds US$12m worth of CarMax stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Component | 2024 | 2023 | Proportion (2024) |
Salary | US$1.2m | US$1.2m | 10% |
Other | US$11m | US$10m | 90% |
Total Compensation | US$12m | US$12m | 100% |
Speaking on an industry level, nearly 16% of total compensation represents salary, while the remainder of 84% is other remuneration. In CarMax's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
A Look at CarMax, Inc.'s Growth Numbers
Over the last three years, CarMax, Inc. has shrunk its earnings per share by 13% per year. Its revenue is down 9.4% over the previous year.
The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has CarMax, Inc. Been A Good Investment?
Few CarMax, Inc. shareholders would feel satisfied with the return of -39% over three years. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
In Summary...
Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 1 warning sign for CarMax that investors should look into moving forward.
Important note: CarMax 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.
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