Bill Nash became the CEO of CarMax, Inc. (NYSE:KMX) in 2016. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. Then we'll look at a snap shot of the business growth. 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.
How Does Bill Nash's Compensation Compare With Similar Sized Companies?
Our data indicates that CarMax, Inc. is worth US$16b, and total annual CEO compensation was reported as US$9.0m for the year to February 2019. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$1.1m. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. When we examined a group of companies with market caps over US$8.0b, we found that their median CEO total compensation was US$11m. There aren't very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.
That means Bill Nash receives fairly typical remuneration for the CEO of a large company. While this data point isn't particularly informative alone, it gains more meaning when considered with business performance.
You can see a visual representation of the CEO compensation at CarMax, below.
Is CarMax, Inc. Growing?
Over the last three years CarMax, Inc. has grown its earnings per share (EPS) by an average of 18% per year (using a line of best fit). Its revenue is up 8.4% over last year.
This demonstrates that the company has been improving recently. A good result. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. Shareholders might be interested in this free visualization of analyst forecasts.
Has CarMax, Inc. Been A Good Investment?
Most shareholders would probably be pleased with CarMax, Inc. for providing a total return of 76% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
Bill Nash is paid around the same as most CEOs of large companies.
Shareholders would surely be happy to see that shareholder returns have been great, and the earnings per share are up. So one could argue the CEO compensation is quite modest, if you consider company performance! If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at CarMax.
If you want to buy a stock that is better than CarMax, this free list of high return, low debt companies is a great place to look.
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