Is Lithia Motors, Inc.’s (NYSE:LAD) CEO Overpaid Relative To Its Peers?

Bryan DeBoer has been the CEO of Lithia Motors, Inc. (NYSE:LAD) since 2012. 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 Lithia Motors

How Does Bryan DeBoer’s Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Lithia Motors, Inc. has a market cap of US$3.0b, and reported total annual CEO compensation of US$5.5m for the year to December 2018. While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$1.0m. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$2.0b to US$6.4b. The median total CEO compensation was US$4.9m.

That means Bryan DeBoer receives fairly typical remuneration for the CEO of a company that size. Although this fact alone doesn’t tell us a great deal, it becomes more relevant when considered against the business performance.

You can see a visual representation of the CEO compensation at Lithia Motors, below.

NYSE:LAD CEO Compensation, February 14th 2020
NYSE:LAD CEO Compensation, February 14th 2020

Is Lithia Motors, Inc. Growing?

On average over the last three years, Lithia Motors, Inc. has grown earnings per share (EPS) by 14% each year (using a line of best fit). It achieved revenue growth of 7.2% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It’s good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. It could be important to check this free visual depiction of what analysts expect for the future.

Has Lithia Motors, Inc. Been A Good Investment?

I think that the total shareholder return of 37%, over three years, would leave most Lithia Motors, Inc. shareholders smiling. This strong performance might mean some shareholders don’t mind if the CEO were to be paid more than is normal for a company of its size.

In Summary…

Bryan DeBoer is paid around the same as most CEOs of similar size companies.

The company is growing earnings per share and total shareholder returns have been pleasing. So one could argue the CEO compensation is quite modest, if you consider company performance! Shareholders may want to check for free if Lithia Motors insiders are buying or selling shares.

Important note: Lithia Motors 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.

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.

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