In 1999 Roger Penske was appointed CEO of Penske Automotive Group, Inc. (NYSE:PAG). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we’ll look at a snap shot of the business growth. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Roger Penske’s Compensation Compare With Similar Sized Companies?
According to our data, Penske Automotive Group, Inc. has a market capitalization of US$3.9b, and pays its CEO total annual compensation worth US$6.8m. (This figure is for the year to 2017). While we always look at total compensation first, we note that the salary component is less, at US$1.4m. When we examined a selection of companies with market caps ranging from US$2.0b to US$6.4b, we found the median CEO compensation was US$4.9m.
Thus we can conclude that Roger Penske receives more in total compensation than the median of a group of companies in the same market, and of similar size to Penske Automotive Group, Inc.. However, this doesn’t necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.
You can see, below, how CEO compensation at Penske Automotive Group has changed over time.
Is Penske Automotive Group, Inc. Growing?
Over the last three years Penske Automotive Group, Inc. has grown its earnings per share (EPS) by an average of 32% per year (using a line of best fit). Its revenue is up 8.9% over last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. It’s good to see a bit of revenue growth, as this suggests the business is able to grow sustainably.
You might want to check this free visual report on analyst forecasts for future earnings.
Has Penske Automotive Group, Inc. Been A Good Investment?
Most shareholders would probably be pleased with Penske Automotive Group, Inc. for providing a total return of 60% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
We compared total CEO remuneration at Penske Automotive Group, Inc. with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of that group.
Importantly, though, the company has impressed with its earnings per share growth, over three years. Even better, returns to shareholders have been plentiful, over the same time period. As a result of this good performance, the CEO remuneration may well be quite reasonable. So you may want to check if insiders are buying Penske Automotive Group shares with their own money (free access).
Or you could feast your eyes on this interactive graph depicting past earnings, cash flow and revenue.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.