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Shareholders may be wondering what CEO Jeff Gorman plans to do to improve the less than great performance at The Gorman-Rupp Company (NYSE:GRC) recently. They will get a chance to exercise their voting power to influence the future direction of the company in the next AGM on 22 April 2021. Setting appropriate executive remuneration to align with the interests of shareholders may also be a way to influence the company performance in the long run. We have prepared some analysis below to show that CEO compensation looks to be reasonable.
Comparing The Gorman-Rupp Company's CEO Compensation With the industry
At the time of writing, our data shows that The Gorman-Rupp Company has a market capitalization of US$884m, and reported total annual CEO compensation of US$1.2m for the year to December 2020. That's mostly flat as compared to the prior year's compensation. While we always look at total compensation first, our analysis shows that the salary component is less, at US$500k.
On examining similar-sized companies in the industry with market capitalizations between US$400m and US$1.6b, we discovered that the median CEO total compensation of that group was US$2.2m. This suggests that Jeff Gorman is paid below the industry median. Furthermore, Jeff Gorman directly owns US$82m worth of shares in the company, implying that they are deeply invested in the company's success.
Talking in terms of the industry, salary represented approximately 19% of total compensation out of all the companies we analyzed, while other remuneration made up 81% of the pie. Gorman-Rupp is paying a higher share of its remuneration through a salary in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
A Look at The Gorman-Rupp Company's Growth Numbers
Over the last three years, The Gorman-Rupp Company has shrunk its earnings per share by 1.7% per year. Its revenue is down 12% over the previous year.
Its a bit disappointing to see that the company has failed to grow its EPS. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has The Gorman-Rupp Company Been A Good Investment?
The Gorman-Rupp Company has served shareholders reasonably well, with a total return of 22% over three years. 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.
Despite the positive returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about the stock keeping up its current momentum. These concerns could be addressed to the board and shareholders should revisit their investment thesis to see if it still makes sense.
Shareholders may want to check for free if Gorman-Rupp insiders are buying or selling shares.
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.
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