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Key Things To Understand About carsales.com's (ASX:CAR) CEO Pay Cheque

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·3 min read
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Cameron McIntyre has been the CEO of carsales.com Ltd (ASX:CAR) since 2017, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether carsales.com pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

View our latest analysis for carsales.com

How Does Total Compensation For Cameron McIntyre Compare With Other Companies In The Industry?

According to our data, carsales.com Ltd has a market capitalization of AU$4.9b, and paid its CEO total annual compensation worth AU$2.3m over the year to June 2020. We note that's an increase of 31% above last year. Notably, the salary which is AU$1.33m, represents most of the total compensation being paid.

In comparison with other companies in the industry with market capitalizations ranging from AU$2.7b to AU$8.5b, the reported median CEO total compensation was AU$2.4m. This suggests that carsales.com remunerates its CEO largely in line with the industry average. Moreover, Cameron McIntyre also holds AU$5.5m worth of carsales.com stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component

2020

2019

Proportion (2020)

Salary

AU$1.3m

AU$1.3m

57%

Other

AU$999k

AU$449k

43%

Total Compensation

AU$2.3m

AU$1.8m

100%

On an industry level, around 73% of total compensation represents salary and 27% is other remuneration. carsales.com pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

ceo-compensation
ceo-compensation

carsales.com Ltd's Growth

carsales.com Ltd's earnings per share (EPS) grew 2.5% per year over the last three years. Its revenue is down 5.3% 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. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has carsales.com Ltd Been A Good Investment?

Most shareholders would probably be pleased with carsales.com Ltd for providing a total return of 51% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

As we noted earlier, carsales.com pays its CEO in line with similar-sized companies belonging to the same industry. But the company has been found wanting in terms of EPS growth over the past three years. On the other hand, shareholder returns over the same period have been very healthy. We would like to see EPS growth from the business, although we wouldn't say the CEO compensation is high.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 2 warning signs for carsales.com that investors should think about before committing capital to this stock.

Important note: carsales.com 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 (at) simplywallst.com.