How Should Investors Feel About The Goodyear Tire & Rubber Company’s (NASDAQ:GT) CEO Pay?
Rich Kramer has been the CEO of The Goodyear Tire & Rubber Company (NASDAQ:GT) since 2010. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.
View our latest analysis for Goodyear Tire & Rubber
How Does Rich Kramer’s Compensation Compare With Similar Sized Companies?
According to our data, The Goodyear Tire & Rubber Company has a market capitalization of US$5.0b, and pays its CEO total annual compensation worth US$11m. That’s actually a decrease on the year before. We examined companies with market caps from US$4.0b to US$12.0b, and discovered that the median CEO compensation of that group was US$7m.
Thus we can conclude that Rich Kramer receives more in total compensation than the median of a group of companies in the same market, and of similar size to The Goodyear Tire & Rubber Company. However, this doesn’t necessarily mean the pay is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
You can see a visual representation of the CEO compensation at Goodyear Tire & Rubber, below.
Is The Goodyear Tire & Rubber Company Growing?
The Goodyear Tire & Rubber Company has reduced its earnings per share by an average of 33% a year, over the last three years. It achieved revenue growth of 4.1% over the last year.
Few shareholders would be pleased to read that earnings per share are lower over three years. The modest increase in revenue in the last year isn’t enough to make me overlook the disappointing change in earnings per share. It’s hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration.
You might want to check this free visual report on analyst forecasts for future earnings.
Has The Goodyear Tire & Rubber Company Been A Good Investment?
Given the total loss of 31% over three years, many shareholders in The Goodyear Tire & Rubber Company are probably rather dissatisfied, to say the least. It therefore might be upsetting for shareholders if the CEO were paid generously.
In Summary…
We compared the total CEO remuneration paid by The Goodyear Tire & Rubber Company, and compared it to remuneration at a group of similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.
Earnings per share have not grown in three years, and the revenue growth fails to impress us.
Over the same period, investors would have come away with nothing in the way of share price gains. Some might well form the view that the CEO is paid too generously! So you may want to check if insiders are buying The Goodyear Tire & Rubber Company shares with their own money (free access).
Or you might rather take a peek at this analytical visualization of historic cash flow, earnings and revenue.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
