Chip Brewer has been the CEO of Callaway Golf Company (NYSE:ELY) since 2012. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we'll consider growth that the business demonstrates. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.
How Does Chip Brewer's Compensation Compare With Similar Sized Companies?
Our data indicates that Callaway Golf Company is worth US$1.8b, and total annual CEO compensation was reported as US$6.2m for the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$845k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$1.0b to US$3.2b. The median total CEO compensation was US$4.1m.
It would therefore appear that Callaway Golf Company pays Chip Brewer more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
The graphic below shows how CEO compensation at Callaway Golf has changed from year to year.
Is Callaway Golf Company Growing?
On average over the last three years, Callaway Golf Company has shrunk earnings per share by 8.1% each year (measured with a line of best fit). Its revenue is up 14% over last year.
Few shareholders would be pleased to read that earnings per share are lower over three years. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for me to put aside my concerns around earnings. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. You might want to check this free visual report on analyst forecasts for future earnings.
Has Callaway Golf Company Been A Good Investment?
Boasting a total shareholder return of 67% over three years, Callaway Golf Company has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
We compared the total CEO remuneration paid by Callaway Golf Company, and compared it to remuneration at a group of similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.
Earnings per share have not grown in three years, and the revenue growth fails to impress us. But clearly there are some positives, because investors have done well over the same time frame. Considering this, shareholders are probably not too worried about the CEO compensation. So you may want to check if insiders are buying Callaway Golf shares with their own money (free access).
Important note: Callaway Golf may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
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