Is GrowGeneration Corp.'s (NASDAQ:GRWG) CEO Being Overpaid?
Darren Lampert became the CEO of GrowGeneration Corp. (NASDAQ:GRWG) in 2014. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we'll consider growth that the business demonstrates. 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.
Check out our latest analysis for GrowGeneration
How Does Darren Lampert's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that GrowGeneration Corp. has a market cap of US$228m, and reported total annual CEO compensation of US$356k for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$193k. When we examined a selection of companies with market caps ranging from US$100m to US$400m, we found the median CEO total compensation was US$1.1m.
A first glance this seems like a real positive for shareholders, since Darren Lampert is paid less than the average total compensation paid by similar sized companies. Though positive, it's important we delve into the performance of the actual business.
You can see, below, how CEO compensation at GrowGeneration has changed over time.
Is GrowGeneration Corp. Growing?
Over the last three years GrowGeneration Corp. has shrunk its earnings per share by an average of 13% per year (measured with a line of best fit). It achieved revenue growth of 169% over the last year.
As investors, we are a bit wary of companies that have lower earnings per share, over three years. But in contrast the revenue growth is strong, suggesting future potential for earnings growth. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. It could be important to check this free visual depiction of what analysts expect for the future.
Has GrowGeneration Corp. Been A Good Investment?
I think that the total shareholder return of 211%, over three years, would leave most GrowGeneration Corp. shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
In Summary...
It appears that GrowGeneration Corp. remunerates its CEO below most similar sized companies.
It's well worth noting that while Darren Lampert is paid below what is normal at companies of similar size, the returns have been very pleasing, over the last three years. We would like to see EPS growth, but in our view it seems the CEO is modestly remunerated. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling GrowGeneration (free visualization of insider trades).
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.
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.
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