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Is carsales.com Ltd's (ASX:CAR) CEO Overpaid Relative To Its Peers?

Simply Wall St

Cameron McIntyre has been the CEO of carsales.com Ltd (ASX:CAR) since 2017. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we'll look at a snap shot of the business growth. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.

Check out our latest analysis for carsales.com

How Does Cameron McIntyre's Compensation Compare With Similar Sized Companies?

According to our data, carsales.com Ltd has a market capitalization of AU$3.8b, and paid its CEO total annual compensation worth AU$1.8m over the year to June 2019. That's below the compensation, last year. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at AU$1.3m. We examined companies with market caps from AU$2.9b to AU$9.4b, and discovered that the median CEO total compensation of that group was AU$3.3m.

A first glance this seems like a real positive for shareholders, since Cameron McIntyre is paid less than the average total compensation paid by similar sized companies. Though positive, it's important we delve into the performance of the actual business.

You can see, below, how CEO compensation at carsales.com has changed over time.

ASX:CAR CEO Compensation, October 29th 2019

Is carsales.com Ltd Growing?

Over the last three years carsales.com Ltd has grown its earnings per share (EPS) by an average of 14% per year (using a line of best fit). In the last year, its revenue is up 11%.

This shows that the company has improved itself over the last few years. Good news for shareholders. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. You might want to check this free visual report on analyst forecasts for future earnings.

Has carsales.com Ltd Been A Good Investment?

Boasting a total shareholder return of 62% over three years, carsales.com Ltd has done well by shareholders. 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.

In Summary...

It appears that carsales.com Ltd remunerates its CEO below most similar sized companies.

Considering the underlying business is growing earnings, this would suggest the pay is modest. And given most shareholders are probably very happy with recent returns, you might even think that Cameron McIntyre deserves a raise! Most shareholders like to see a modestly paid CEO combined with strong performance by the company. But it is even better if company insiders are also buying shares with their own money. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at carsales.com.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.

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. Thank you for reading.