Should You Worry About AutoNation Inc’s (NYSE:AN) CEO Pay Check?
Mike Jackson has been the CEO of AutoNation Inc (NYSE:AN) since 1999. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. 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.
View our latest analysis for AutoNation
How Does Mike Jackson’s Compensation Compare With Similar Sized Companies?
At the time of writing our data says that AutoNation Inc has a market cap of US$3.5b, and is paying total annual CEO compensation of US$12m. We note that’s an increase of 9.8% above last year. We looked at a group of companies with market capitalizations from US$2.0b to US$6.4b, and the median CEO compensation was US$5m.
Thus we can conclude that Mike Jackson receives more in total compensation than the median of a group of companies in the same market, and of similar size to AutoNation Inc. However, this doesn’t necessarily mean the pay is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
The graphic below shows how CEO compensation at AutoNation has changed from year to year.
Is AutoNation Inc Growing?
Over the last three years AutoNation Inc has grown its earnings per share (EPS) by an average of 7.0% per year. In the last year, its revenue is up 1.7%.
I’d prefer higher revenue growth, but I’m happy with the modest EPS growth. It’s clear the performance has been quite decent, but it it falls short of outstanding,based on this information.
It could be important to check this free visual depiction of what analysts expect for the future.
Has AutoNation Inc Been A Good Investment?
Since shareholders would have lost about 38% over three years, some AutoNation Inc shareholders would surely be feeling negative emotions. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.
In Summary…
We compared the total CEO remuneration paid by AutoNation Inc, and compared it to remuneration at a group of similar sized companies. We found that it pays well over the median amount paid in the benchmark group.
The growth in the business has been uninspiring, but the shareholder returns have arguably been worse, over the last three years. So shareholders might not feel great about the fact that CEO pay increased on last year. Shareholders may wish to consider further research. Although we don’t think the CEO pay is too high, it is probably more on the generous side of things. Whatever your view on compensation, you might want to check if insiders are buying or selling AutoNation Inc shares (free trial).
Or you might prefer gaze upon this detailed graph of past earnings, revenue and cash flow .
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 editorial-team@simplywallst.com.
