Stock Analysis

What We Learned About Motorcar Parts of America's (NASDAQ:MPAA) CEO Compensation

  •  Updated
NasdaqGS:MPAA
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This article will reflect on the compensation paid to Selwyn Joffe who has served as CEO of Motorcar Parts of America, Inc. (NASDAQ:MPAA) since 2003. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

See our latest analysis for Motorcar Parts of America

How Does Total Compensation For Selwyn Joffe Compare With Other Companies In The Industry?

Our data indicates that Motorcar Parts of America, Inc. has a market capitalization of US$364m, and total annual CEO compensation was reported as US$3.1m for the year to March 2020. That's a notable decrease of 16% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$753k.

On comparing similar companies from the same industry with market caps ranging from US$200m to US$800m, we found that the median CEO total compensation was US$487k. Accordingly, our analysis reveals that Motorcar Parts of America, Inc. pays Selwyn Joffe north of the industry median. What's more, Selwyn Joffe holds US$4.2m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component20202019Proportion (2020)
Salary US$753k US$753k 24%
Other US$2.3m US$2.9m 76%
Total CompensationUS$3.1m US$3.7m100%

On an industry level, roughly 22% of total compensation represents salary and 78% is other remuneration. According to our research, Motorcar Parts of America has allocated a higher percentage of pay to salary in comparison to the wider industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

ceo-compensation
NasdaqGS:MPAA CEO Compensation December 30th 2020

Motorcar Parts of America, Inc.'s Growth

Motorcar Parts of America, Inc. has reduced its earnings per share by 48% a year over the last three years. Its revenue is up 2.7% over the last year.

Overall this is not a very positive result for shareholders. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Motorcar Parts of America, Inc. Been A Good Investment?

Given the total shareholder loss of 28% over three years, many shareholders in Motorcar Parts of America, Inc. are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

As we touched on above, Motorcar Parts of America, Inc. is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Disappointingly, share price gains over the last three years have failed to materialize. Arguably worse, we've been waiting for positive EPS growth for the last three years. Considering such poor performance, we think shareholders might be concerned if the CEO's compensation were to grow.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 4 warning signs (and 1 which is a bit unpleasant) in Motorcar Parts of America we think you should know about.

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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