Does Avis Budget Group Inc’s (NASDAQ:CAR) CEO Salary Reflect Performance?
Larry De Shon became the CEO of Avis Budget Group Inc (NASDAQ:CAR) in 2016. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we’ll consider growth that the business demonstrates. 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.
View our latest analysis for Avis Budget Group
How Does Larry De Shon’s Compensation Compare With Similar Sized Companies?
Our data indicates that Avis Budget Group Inc is worth US$2.4b, and total annual CEO compensation is US$6.9m. (This figure is for the year to 2017). While we always look at total compensation first, we note that the salary component is less, at US$1.1m. 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$3.4m.
As you can see, Larry De Shon is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Avis Budget Group Inc is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance.
The graphic below shows how CEO compensation at Avis Budget Group has changed from year to year.
Is Avis Budget Group Inc Growing?
Over the last three years Avis Budget Group Inc has grown its earnings per share (EPS) by an average of 25% per year. Its revenue is up 4.4% over last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It’s good to see a bit of revenue growth, as this suggests the business is able to grow sustainably.
It could be important to check this free visual depiction of what analysts expect for the future.
Has Avis Budget Group Inc Been A Good Investment?
Given the total loss of 13% over three years, many shareholders in Avis Budget Group Inc are probably rather dissatisfied, to say the least. It therefore might be upsetting for shareholders if the CEO were paid generously.
In Summary…
We compared total CEO remuneration at Avis Budget Group Inc with the amount paid at companies with a similar market capitalization. Our data suggests that it pays above the median CEO pay within that group.
Importantly, though, the company has impressed with its earnings per share growth, over three years. Having said that, shareholders may be disappointed with the weak returns over the last three years. One might thus conclude that it would be better if the company waited until growth is reflected in the share price, before increasing CEO compensation. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Avis Budget Group.
Or you might rather take a peek at this analytical visualization of historic cash flow, earnings and revenue.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
