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Does TrueCar, Inc.’s (NASDAQ:TRUE) CEO Pay Reflect Performance?

Chip Perry became the CEO of TrueCar, Inc. (NASDAQ:TRUE) in 2015. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.

Check out our latest analysis for TrueCar

How Does Chip Perry’s Compensation Compare With Similar Sized Companies?

Our data indicates that TrueCar, Inc. is worth US$1.0b, and total annual CEO compensation is US$5.1m. (This is based on the year to 2017). We think total compensation is more important but we note that the CEO salary is lower, at US$800k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$400m to US$1.6b. The median total CEO compensation was US$2.3m.

It would therefore appear that TrueCar, Inc. pays Chip Perry more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn’t mean the remuneration 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 a visual representation of the CEO compensation at TrueCar, below.

NasdaqGS:TRUE CEO Compensation December 12th 18
NasdaqGS:TRUE CEO Compensation December 12th 18

Is TrueCar, Inc. Growing?

On average over the last three years, TrueCar, Inc. has grown earnings per share (EPS) by 34% each year. Its revenue is up 10% over last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. 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 TrueCar, Inc. Been A Good Investment?

TrueCar, Inc. 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…

We examined the amount TrueCar, Inc. pays its CEO, and compared it to the amount paid by similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.

However we must not forget that the EPS growth has been very strong over three years. Looking at the same time period, we think that the shareholder returns are respectable. While it may be worth researching further, we don’t see a problem with the CEO pay, given the good EPS growth. So you may want to check if insiders are buying TrueCar shares with their own money (free access).

Or you could feast your eyes on this interactive graph depicting past earnings, cash flow 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.

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