Is AmerisourceBergen Corporation (NYSE:ABC) Excessively Paying Its CEO?
Steve Collis has been the CEO of AmerisourceBergen Corporation (NYSE:ABC) since 2011. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. 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. This method should give us information to assess how appropriately the company pays the CEO.
Check out our latest analysis for AmerisourceBergen
How Does Steve Collis's Compensation Compare With Similar Sized Companies?
Our data indicates that AmerisourceBergen Corporation is worth US$17b, and total annual CEO compensation was reported as US$12m for the year to September 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$1.2m. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We took a group of companies with market capitalizations over US$8.0b, and calculated the median CEO total compensation to be US$11m. There aren't very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.
So Steve Collis receives a similar amount to the median CEO pay, amongst the companies we looked at. This doesn't tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context.
You can see a visual representation of the CEO compensation at AmerisourceBergen, below.
Is AmerisourceBergen Corporation Growing?
On average over the last three years, AmerisourceBergen Corporation has shrunk earnings per share by 5.1% each year (measured with a line of best fit). In the last year, its revenue is up 6.9%.
Sadly for shareholders, earnings per share are actually down, over three years. The fairly low revenue growth fails to impress given that the earnings per share is down. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Shareholders might be interested in this free visualization of analyst forecasts.
Has AmerisourceBergen Corporation Been A Good Investment?
AmerisourceBergen Corporation has generated a total shareholder return of 15% over three years, so most shareholders would be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.
In Summary...
Steve Collis is paid around the same as most CEOs of large companies.
The company isn't growing earnings per share, and nor have the total returns inspired us. We wouldn't say the CEO pay is too high, but we'd venture the company should look to improve its business metrics (and share price) before paying any more. Shareholders may want to check for free if AmerisourceBergen insiders are buying or selling shares.
If you want to buy a stock that is better than AmerisourceBergen, this free list of high return, low debt companies is a great place to look.
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.
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