Paul Donahue has been the CEO of Genuine Parts Company (NYSE:GPC) since 2016. First, this article will compare CEO compensation with compensation at other large 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 process should give us an idea about how appropriately the CEO is paid.
How Does Paul Donahue's Compensation Compare With Similar Sized Companies?
According to our data, Genuine Parts Company has a market capitalization of US$14b, and paid its CEO total annual compensation worth US$5.3m over the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$1.1m. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. When we examined a group of companies with market caps over US$8.0b, we found that their median CEO total compensation was US$11m. There aren't very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.
This would give shareholders a good impression of the company, since most large companies pay more, leaving less for shareholders. However, before we heap on the praise, we should delve deeper to understand business performance.
You can see a visual representation of the CEO compensation at Genuine Parts, below.
Is Genuine Parts Company Growing?
Over the last three years Genuine Parts Company has grown its earnings per share (EPS) by an average of 7.3% per year (using a line of best fit). In the last year, its revenue is up 5.2%.
I'm not particularly impressed by the revenue growth, but it is good to see modest EPS growth. So there are some positives here, but not enough to earn high praise. You might want to check this free visual report on analyst forecasts for future earnings.
Has Genuine Parts Company Been A Good Investment?
With a total shareholder return of 11% over three years, Genuine Parts Company shareholders would, in general, be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
It appears that Genuine Parts Company remunerates its CEO below most large companies.
Paul Donahue is paid less than what is normal at large companies, and but overall performance has left me uninspired. So shareholders may not be elated, but they shouldn't be worried about the CEO compensation, either. So you may want to check if insiders are buying Genuine Parts shares with their own money (free access).
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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