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How Should Investors Feel About Crocs' (NASDAQ:CROX) CEO Remuneration?

Simply Wall St
·3 min read

This article will reflect on the compensation paid to Andrew Rees who has served as CEO of Crocs, Inc. (NASDAQ:CROX) since 2017. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

Check out our latest analysis for Crocs

How Does Total Compensation For Andrew Rees Compare With Other Companies In The Industry?

Our data indicates that Crocs, Inc. has a market capitalization of US$3.5b, and total annual CEO compensation was reported as US$6.2m for the year to December 2019. That's a notable decrease of 32% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$950k.

In comparison with other companies in the industry with market capitalizations ranging from US$2.0b to US$6.4b, the reported median CEO total compensation was US$9.4m. Accordingly, Crocs pays its CEO under the industry median. What's more, Andrew Rees holds US$67m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component

2019

2018

Proportion (2019)

Salary

US$950k

US$950k

15%

Other

US$5.3m

US$8.2m

85%

Total Compensation

US$6.2m

US$9.1m

100%

Talking in terms of the industry, salary represented approximately 30% of total compensation out of all the companies we analyzed, while other remuneration made up 70% of the pie. Crocs sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

ceo-compensation
ceo-compensation

A Look at Crocs, Inc.'s Growth Numbers

Crocs, Inc.'s earnings per share (EPS) grew 87% per year over the last three years. It achieved revenue growth of 4.9% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's also good to see modest revenue growth, suggesting the underlying business is healthy. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Crocs, Inc. Been A Good Investment?

Boasting a total shareholder return of 391% over three years, Crocs, Inc. has done well by shareholders. 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...

As we touched on above, Crocs, Inc. is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Since EPS growth is heading in a positive direction; many would agree with our assessment that the pay is modest. Given the strong history of shareholder returns, the shareholders are probably very happy with Andrew's performance.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 3 warning signs for Crocs (1 is potentially serious!) that you should be aware of before investing here.

Important note: Crocs is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.