This article will reflect on the compensation paid to Jeff Gorman who has served as CEO of The Gorman-Rupp Company (NYSE:GRC) since 1998. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Gorman-Rupp.
Comparing The Gorman-Rupp Company's CEO Compensation With the industry
According to our data, The Gorman-Rupp Company has a market capitalization of US$822m, and paid its CEO total annual compensation worth US$1.1m over the year to December 2019. That's a fairly small increase of 4.6% over the previous year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$485k.
In comparison with other companies in the industry with market capitalizations ranging from US$400m to US$1.6b, the reported median CEO total compensation was US$3.4m. That is to say, Jeff Gorman is paid under the industry median. Moreover, Jeff Gorman also holds US$55m worth of Gorman-Rupp stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Speaking on an industry level, nearly 16% of total compensation represents salary, while the remainder of 84% is other remuneration. According to our research, Gorman-Rupp has allocated a higher percentage of pay to salary in comparison to the wider industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
The Gorman-Rupp Company's Growth
Over the past three years, The Gorman-Rupp Company has seen its earnings per share (EPS) grow by 13% per year. In the last year, its revenue is down 5.2%.
Shareholders would be glad to know that the company has improved itself over the last few years. It's always a tough situation when revenues are not growing, but ultimately profits are more important. 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 The Gorman-Rupp Company Been A Good Investment?
With a total shareholder return of 32% over three years, The Gorman-Rupp Company shareholders would, in general, be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.
As we touched on above, The Gorman-Rupp Company is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. But over the last three years, earnings growth has been growing rapidly, which is a great sign for the company. Unfortunately, although shareholder returns are growing, they haven't impressed us as much in comparison, over the same period. We would wish for better returns (whether dividends or capital gains) but we do admire the solid EPS growth on show here. So it's fair to say Jeff has done quite well despite modest compensation and shareholders might not be averse to a raise.
Whatever your view on compensation, you might want to check if insiders are buying or selling Gorman-Rupp shares (free trial).
Switching gears from Gorman-Rupp, 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 firstname.lastname@example.org.