Darryl Abotomey became the CEO of Bapcor Limited (ASX:BAP) in 2011, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
How Does Total Compensation For Darryl Abotomey Compare With Other Companies In The Industry?
According to our data, Bapcor Limited has a market capitalization of AU$2.4b, and paid its CEO total annual compensation worth AU$2.8m over the year to June 2020. That's a modest increase of 5.1% on the prior year. We think total compensation is more important but our data shows that the CEO salary is lower, at AU$1.2m.
For comparison, other companies in the same industry with market capitalizations ranging between AU$1.3b and AU$4.3b had a median total CEO compensation of AU$403k. Hence, we can conclude that Darryl Abotomey is remunerated higher than the industry median. Moreover, Darryl Abotomey also holds AU$9.8m worth of Bapcor stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Speaking on an industry level, nearly 67% of total compensation represents salary, while the remainder of 33% is other remuneration. Bapcor sets aside a smaller share of compensation for salary, in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
A Look at Bapcor Limited's Growth Numbers
Bapcor Limited's earnings per share (EPS) grew 10% per year over the last three years. It achieved revenue growth of 13% over the last year.
Shareholders would be glad to know that the company has improved itself over the last few years. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Bapcor Limited Been A Good Investment?
We think that the total shareholder return of 33%, over three years, would leave most Bapcor Limited shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
As previously discussed, Darryl is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. Importantly though, EPS growth and shareholder returns are very impressive over the last three years. As a result of the excellent all-round performance of the company, we believe CEO compensation is fair. And given most shareholders are probably very happy with recent returns, they might even think that Darryl deserves a raise!
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 2 warning signs for Bapcor that investors should be aware of in a dynamic business environment.
Important note: Bapcor is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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