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Is The Gorman-Rupp Company (NYSE:GRC) Excessively Paying Its CEO?

Simply Wall St

Jeff Gorman has been the CEO of The Gorman-Rupp Company (NYSE:GRC) since 1998. First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.

View our latest analysis for Gorman-Rupp

How Does Jeff Gorman's Compensation Compare With Similar Sized Companies?

At the time of writing our data says that The Gorman-Rupp Company has a market cap of US$868m, and is paying total annual CEO compensation of US$1.1m. (This figure is for the year to December 2018). We think total compensation is more important but we note that the CEO salary is lower, at US$460k. We examined companies with market caps from US$400m to US$1.6b, and discovered that the median CEO total compensation of that group was US$2.7m.

This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. While this is a good thing, you'll need to understand the business better before you can form an opinion.

You can see, below, how CEO compensation at Gorman-Rupp has changed over time.

NYSE:GRC CEO Compensation, August 1st 2019

Is The Gorman-Rupp Company Growing?

Over the last three years The Gorman-Rupp Company has grown its earnings per share (EPS) by an average of 20% per year (using a line of best fit). It achieved revenue growth of 3.5% over the 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 The Gorman-Rupp Company Been A Good Investment?

I think that the total shareholder return of 36%, over three years, would leave most The Gorman-Rupp Company shareholders smiling. 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 looks like The Gorman-Rupp Company pays its CEO less than 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 Jeff Gorman deserves a raise!

It's not often we see shareholders do so well, and yet the CEO is paid modestly. But it is even better if company insiders are also buying shares with their own money. Shareholders may want to check for free if Gorman-Rupp insiders are buying or selling shares.

Important note: Gorman-Rupp 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.

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.