In 2015 Rich Williams was appointed CEO of Groupon, Inc. (NASDAQ:GRPN). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Rich Williams’s Compensation Compare With Similar Sized Companies?
According to our data, Groupon, Inc. has a market capitalization of US$1.6b, and paid its CEO total annual compensation worth US$10m over the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$750k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. When we examined a selection of companies with market caps ranging from US$1.0b to US$3.2b, we found the median CEO total compensation was US$4.1m.
Thus we can conclude that Rich Williams receives more in total compensation than the median of a group of companies in the same market, and of similar size to Groupon, Inc.. However, this doesn’t necessarily mean the pay 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.
You can see a visual representation of the CEO compensation at Groupon, below.
Is Groupon, Inc. Growing?
On average over the last three years, Groupon, Inc. has grown earnings per share (EPS) by 81% each year (using a line of best fit). Its revenue is down 9.0% over last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. Revenue growth is a real positive for growth, but ultimately profits are more important. Shareholders might be interested in this free visualization of analyst forecasts.
Has Groupon, Inc. Been A Good Investment?
Given the total loss of 45% over three years, many shareholders in Groupon, Inc. are probably rather dissatisfied, to say the least. It therefore might be upsetting for shareholders if the CEO were paid generously.
We compared the total CEO remuneration paid by Groupon, 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.
However we must not forget that the EPS growth has been very strong over three years. Having said that, shareholders may be disappointed with the weak returns over the last three years. One might thus conclude that it would be better if the company waited until growth is reflected in the share price, before increasing CEO compensation. So you may want to check if insiders are buying Groupon shares with their own money (free access).
If you want to buy a stock that is better than Groupon, this free list of high return, low debt companies is a great place to look.
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