In 2000 Steve Kaufer was appointed CEO of TripAdvisor, Inc. (NASDAQ:TRIP). First, this article will compare CEO compensation with compensation at similar sized companies. 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 method should give us information to assess how appropriately the company pays the CEO.
How Does Steve Kaufer's Compensation Compare With Similar Sized Companies?
At the time of writing our data says that TripAdvisor, Inc. has a market cap of US$5.4b, and is paying total annual CEO compensation of US$2.0m. (This number is for the twelve months until December 2018). We think total compensation is more important but we note that the CEO salary is lower, at US$796k. We examined companies with market caps from US$4.0b to US$12b, and discovered that the median CEO total compensation of that group was US$6.8m.
A first glance this seems like a real positive for shareholders, since Steve Kaufer is paid less than the average total compensation paid by similar sized companies. Though positive, it's important we delve into the performance of the actual business.
You can see a visual representation of the CEO compensation at TripAdvisor, below.
Is TripAdvisor, Inc. Growing?
TripAdvisor, Inc. has reduced its earnings per share by an average of 12% a year, over the last three years (measured with a line of best fit). In the last year, its revenue is up 2.0%.
Few shareholders would be pleased to read that earnings per share are lower over three years. The fairly low revenue growth fails to impress given that the earnings per share is down. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. You might want to check this free visual report on analyst forecasts for future earnings.
Has TripAdvisor, Inc. Been A Good Investment?
With a three year total loss of 38%, TripAdvisor, Inc. would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
TripAdvisor, Inc. is currently paying its CEO below what is normal for companies of its size.
The compensation paid to Steve Kaufer is lower than is usual at similar sized companies, but the eps growth is lacking, just like the returns (over three years). Considering all these factors, we'd stop short of saying the CEO pay is too high, but we don't think shareholders would want to see a pay rise before business performance improves. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at TripAdvisor.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.
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