U.S. Markets open in 43 mins

How Much Is GATX Corporation (NYSE:GATX) Paying Its CEO?

Simply Wall St
·4 mins read

Brian Kenney became the CEO of GATX Corporation (NYSE:GATX) in 2005, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. 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 GATX

How Does Total Compensation For Brian Kenney Compare With Other Companies In The Industry?

Our data indicates that GATX Corporation has a market capitalization of US$2.3b, and total annual CEO compensation was reported as US$7.7m for the year to December 2019. Notably, that's an increase of 32% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at US$981k.

In comparison with other companies in the industry with market capitalizations ranging from US$1.0b to US$3.2b, the reported median CEO total compensation was US$4.5m. Accordingly, our analysis reveals that GATX Corporation pays Brian Kenney north of the industry median. What's more, Brian Kenney holds US$12m 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$981k

US$977k

13%

Other

US$6.7m

US$4.8m

87%

Total Compensation

US$7.7m

US$5.8m

100%

On an industry level, around 22% of total compensation represents salary and 78% is other remuneration. GATX pays a modest slice of remuneration through salary, as compared to the broader 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 GATX Corporation's Growth Numbers

Over the last three years, GATX Corporation has shrunk its earnings per share by 2.7% per year. Its revenue is up 6.3% over the last year.

A lack of EPS improvement is not good to see. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has GATX Corporation Been A Good Investment?

With a total shareholder return of 17% over three years, GATX Corporation shareholders would, in general, 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.

To Conclude...

As we noted earlier, GATX pays its CEO higher than the norm for similar-sized companies belonging to the same industry. Unfortunately, EPS has not grown in three years, failing to impress us. And while shareholder returns have been respectable, they have hardly been superb. So you may want to delve deeper, because we don't think the amount Brian makes is justifiable.

CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 4 warning signs for GATX (of which 2 are potentially serious!) that you should know about in order to have a holistic understanding of the stock.

Switching gears from GATX, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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.