Stock Analysis

Our View On Bapcor's (ASX:BAP) CEO Pay

  •  Updated
Source: Shutterstock

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 assess whether Bapcor pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

View our latest analysis for Bapcor

Comparing Bapcor Limited's CEO Compensation With 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 just a smallish increase of 5.1% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at AU$1.2m.

For comparison, other companies in the same industry with market capitalizations ranging between AU$1.4b and AU$4.4b had a median total CEO compensation of AU$392k. Accordingly, our analysis reveals that Bapcor Limited pays Darryl Abotomey north of the industry median. Furthermore, Darryl Abotomey directly owns AU$10m worth of shares in the company, implying that they are deeply invested in the company's success.

Component20202019Proportion (2020)
Salary AU$1.2m AU$1.3m 44%
Other AU$1.6m AU$1.4m 56%
Total CompensationAU$2.8m AU$2.7m100%

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. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

ASX:BAP CEO Compensation September 2nd 2020

Bapcor Limited's Growth

Bapcor Limited's earnings per share (EPS) grew 10% per year over the last three years. Its revenue is up 13% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Bapcor Limited Been A Good Investment?

We think that the total shareholder return of 37%, over three years, would leave most Bapcor Limited 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.

To Conclude...

As we touched on above, Bapcor Limited is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Importantly though, EPS growth and shareholder returns are very impressive over the last three years. Considering such exceptional results for the company, we'd venture to say CEO compensation is fair. And given most shareholders are probably very happy with recent returns, they might even think that Darryl deserves a raise!

CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 2 warning signs for Bapcor that investors should look into moving forward.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

If you’re looking to trade Bapcor, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

Valuation is complex, but we're helping make it simple.

Find out whether Bapcor is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis