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Rich Williams became the CEO of Groupon, Inc. (NASDAQ:GRPN) in 2015. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. 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.
How Does Rich Williams’s Compensation Compare With Similar Sized Companies?
At the time of writing our data says that Groupon, Inc. has a market cap of US$2.1b, and is paying total annual CEO compensation of US$7.8m. (This is based on the year to 2017). While we always look at total compensation first, we note that the salary component is less, at US$700k. We looked at a group of companies with market capitalizations from US$1.0b to US$3.2b, and the median CEO compensation was US$3.5m.
Thus we can conclude that Rich Williams receives more in total compensation than the median of a group of companies in the same market, and of similar size to Groupon, Inc.. However, this doesn’t necessarily mean the pay is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
You can see, below, how CEO compensation at Groupon has changed over time.
Is Groupon, Inc. Growing?
Groupon, Inc. has increased its earnings per share (EPS) by an average of 40% a year, over the last three years (using a line of best fit). It saw its revenue drop -5.8% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. The lack of revenue growth isn’t ideal, but it is the bottom line that counts most in business. You might want to check this free visual report on analyst forecasts for future earnings.
Has Groupon, Inc. Been A Good Investment?
Since shareholders would have lost about 8.1% over three years, some Groupon, Inc. shareholders would surely be feeling negative emotions. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.
We examined the amount Groupon, Inc. pays its CEO, and compared it to the amount paid by similar sized companies. Our data suggests that it pays above the median CEO pay within that group.
However we must not forget that the EPS growth has been very strong over three years. Having said that, shareholders may be disappointed with the weak returns over the last three years. Considering the per share profit growth, but keeping in mind the weak returns, we’d need more time to form a view on CEO compensation. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Groupon.
Important note: Groupon may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
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 firstname.lastname@example.org.