Selwyn Joffe became the CEO of Motorcar Parts of America, Inc. (NASDAQ:MPAA) in 2003, 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 look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Motorcar Parts of America.
Comparing Motorcar Parts of America, Inc.'s CEO Compensation With the industry
Our data indicates that Motorcar Parts of America, Inc. has a market capitalization of US$387m, and total annual CEO compensation was reported as US$3.1m for the year to March 2020. We note that's a decrease of 16% compared to last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$753k.
On examining similar-sized companies in the industry with market capitalizations between US$200m and US$800m, we discovered that the median CEO total compensation of that group was US$3.1m. This suggests that Motorcar Parts of America remunerates its CEO largely in line with the industry average. What's more, Selwyn Joffe holds US$4.5m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
On an industry level, around 22% of total compensation represents salary and 78% is other remuneration. Motorcar Parts of America is paying a higher share of its remuneration through a salary in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
Motorcar Parts of America, Inc.'s Growth
Motorcar Parts of America, Inc. has reduced its earnings per share by 48% a year over the last three years. It achieved revenue growth of 2.7% over the last year.
Few shareholders would be pleased to read that EPS have declined. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. These factors suggest that the business performance wouldn't really justify a high pay packet 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 Motorcar Parts of America, Inc. Been A Good Investment?
Given the total shareholder loss of 18% over three years, many shareholders in Motorcar Parts of America, Inc. are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be lessto generous with CEO compensation.
As we noted earlier, Motorcar Parts of America pays its CEO in line with similar-sized companies belonging to the same industry. Meanwhile, EPS growth and shareholder returns have been in the red for the last three years. It's tough to call out the compensation as inappropriate, but shareholders might not favor a raise before company performance improves.
We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 3 warning signs (and 1 which can't be ignored) in Motorcar Parts of America we think you should know about.
Important note: Motorcar Parts of America 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.
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