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Paul Donahue has been the CEO of Genuine Parts Company (NYSE:GPC) since 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. 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.
How Does Paul Donahue's Compensation Compare With Similar Sized Companies?
According to our data, Genuine Parts Company has a market capitalization of US$15b, and pays its CEO total annual compensation worth US$5.3m. (This is based on the year to December 2018). That's a fairly small increase of 7.7% on year before. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$1.1m. We took a group of companies with market capitalizations over US$8.0b, and calculated the median CEO total compensation to be US$11m. Once you start looking at very large companies, you need to take a broader range, because there simply aren't that many of them.
Most shareholders would consider it a positive that Paul Donahue takes less in total compensation than the CEOs of most other large companies, leaving more for shareholders. Though positive, it's important we delve into the performance of the actual business.
The graphic below shows how CEO compensation at Genuine Parts has changed from year to year.
Is Genuine Parts Company Growing?
Over the last three years Genuine Parts Company has grown its earnings per share (EPS) by an average of 4.2% per year (using a line of best fit). It achieved revenue growth of 11% over the last year.
I think the revenue growth is good. And the improvement in earnings per share is modest but respectable. So while performance isn't amazing, we think it really does seem quite respectable. Shareholders might be interested in this free visualization of analyst forecasts.
Has Genuine Parts Company Been A Good Investment?
Genuine Parts Company has generated a total shareholder return of 15% over three years, so most shareholders would be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
It looks like Genuine Parts Company pays its CEO less than the average at large companies.
It's well worth noting that while Paul Donahue is paid less than most company leaders (at large companies, share price performance has been somewhat uninspiring. However I do not find the CEO compensation to be concerning. Shareholders may want to check for free if Genuine Parts insiders are buying or selling shares.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.