Steve Collis has been the CEO of AmerisourceBergen Corporation (NYSE:ABC) since 2011. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.
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How Does Steve Collis's Compensation Compare With Similar Sized Companies?
At the time of writing our data says that AmerisourceBergen Corporation has a market cap of US$17b, and is paying total annual CEO compensation of US$12m. (This number is for the twelve months until September 2018). We think total compensation is more important but we note that the CEO salary is lower, at US$1.2m. When we examined a group of companies with market caps over US$8.0b, we found that their median CEO total compensation was US$12m. Once you start looking at very large companies, you need to take a broader range, because there simply aren't that many of them.
So Steve Collis is paid around the average of the companies we looked at. Although this fact alone doesn't tell us a great deal, it becomes more relevant when considered against the business performance.
The graphic below shows how CEO compensation at AmerisourceBergen has changed from year to year.
Is AmerisourceBergen Corporation Growing?
AmerisourceBergen Corporation has reduced its earnings per share by an average of 13% a year, over the last three years (measured with a line of best fit). Its revenue is up 9.9% over last year.
Sadly for shareholders, earnings per share are actually down, over three years. The fairly low revenue growth fails to impress given that the earnings per share is down. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. You might want to check this free visual report on analyst forecasts for future earnings.
Has AmerisourceBergen Corporation Been A Good Investment?
AmerisourceBergen Corporation has generated a total shareholder return of 15% over three years, so most shareholders would be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.
Steve Collis is paid around the same as most CEOs of large companies.
We're not seeing great strides in earnings per share, and total returns were decent but not amazing in the last three years. We're not saying the CEO pay is too generous, but it's probably fair to say that many shareholders would like to see improved performance, before any pay rise occurs. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling AmerisourceBergen (free visualization of insider trades).
Important note: AmerisourceBergen may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
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If you spot an error that warrants correction, please contact the editor at email@example.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. Thank you for reading.