Is Automotive Finco Corp. (CVE:AFCC) Overpaying Its CEO?

Kuldeep Billan has been the CEO of Automotive Finco Corp. (CVE:AFCC) since 2014. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we’ll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.

View our latest analysis for Automotive Finco

How Does Kuldeep Billan’s Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Automotive Finco Corp. has a market cap of CA$40m, and reported total annual CEO compensation of CA$408k for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at . We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. We examined a group of similar sized companies, with market capitalizations of below CA$262m. The median CEO total compensation in that group is CA$179k.

Thus we can conclude that Kuldeep Billan receives more in total compensation than the median of a group of companies in the same market, and of similar size to Automotive Finco Corp.. 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.

You can see a visual representation of the CEO compensation at Automotive Finco, below.

TSXV:AFCC CEO Compensation, October 22nd 2019
TSXV:AFCC CEO Compensation, October 22nd 2019

Is Automotive Finco Corp. Growing?

Over the last three years Automotive Finco Corp. has grown its earnings per share (EPS) by an average of 95% per year (using a line of best fit). It saw its revenue drop 1.0% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. The lack of revenue growth isn’t ideal, but it is the bottom line that counts most in business. We don’t have analyst forecasts, but shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Automotive Finco Corp. Been A Good Investment?

With a total shareholder return of 26% over three years, Automotive Finco Corp. 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.

In Summary…

We compared the total CEO remuneration paid by Automotive Finco Corp., 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.

However, the earnings per share growth over three years is certainly impressive. We also note that, over the same time frame, shareholder returns haven’t been bad. While it may be worth researching further, we don’t see a problem with the CEO pay, given the good EPS growth. So you may want to check if insiders are buying Automotive Finco shares with their own money (free access).

If you want to buy a stock that is better than Automotive Finco, this free list of high return, low debt companies is a great place to look.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.