Earl Hesterberg became the CEO of Group 1 Automotive, Inc. (NYSE:GPI) in 2005, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Group 1 Automotive pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
How Does Total Compensation For Earl Hesterberg Compare With Other Companies In The Industry?
At the time of writing, our data shows that Group 1 Automotive, Inc. has a market capitalization of US$1.5b, and reported total annual CEO compensation of US$7.9m for the year to December 2019. We note that's an increase of 15% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.2m.
On comparing similar companies from the same industry with market caps ranging from US$1.0b to US$3.2b, we found that the median CEO total compensation was US$5.5m. Hence, we can conclude that Earl Hesterberg is remunerated higher than the industry median. Moreover, Earl Hesterberg also holds US$25m worth of Group 1 Automotive stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
On an industry level, roughly 20% of total compensation represents salary and 80% is other remuneration. Group 1 Automotive sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
A Look at Group 1 Automotive, Inc.'s Growth Numbers
Group 1 Automotive, Inc. has seen its earnings per share (EPS) increase by 6.6% a year over the past three years. Its revenue is down 4.8% over the previous year.
We would prefer it if there was revenue growth, but the modest improvement in EPS is good. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Group 1 Automotive, Inc. Been A Good Investment?
With a total shareholder return of 23% over three years, Group 1 Automotive, Inc. shareholders would, in general, be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.
As we noted earlier, Group 1 Automotive pays its CEO higher than the norm for similar-sized companies belonging to the same industry. However, EPS growth is not moving in the right direction, and the returns to shareholders could have been better, over the last three years. We'd stop short of saying CEO pay is inappropriate, but we'd like to see healthier business growth from the company, moving forward.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 4 warning signs for Group 1 Automotive that investors should look into moving forward.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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