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.
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.
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.
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.
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.
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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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