Jeffrey Gorman has been the CEO of The Gorman-Rupp Company (NYSE:GRC) since 1998. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.
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How Does Jeffrey Gorman’s Compensation Compare With Similar Sized Companies?
According to our data, The Gorman-Rupp Company has a market capitalization of US$865m, and pays its CEO total annual compensation worth US$962k. (This number is for the twelve months until 2017). While we always look at total compensation first, we note that the salary component is less, at US$433k. When we examined a selection of companies with market caps ranging from US$400m to US$1.6b, we found the median CEO compensation was US$2.2m.
Most shareholders would consider it a positive that Jeffrey Gorman takes less compensation than the CEOs of most similar size companies, leaving more for shareholders. However, before we heap on the praise, we should delve deeper to understand business performance.
The graphic below shows how CEO compensation at Gorman-Rupp has changed from year to year.
Is The Gorman-Rupp Company Growing?
The Gorman-Rupp Company has increased its earnings per share (EPS) by an average of 11% a year, over the last three years (using a line of best fit). Its revenue is up 7.3% over last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It’s nice to see a little revenue growth, as this is consistent with healthy business conditions.
Shareholders might be interested in this free visualization of analyst forecasts. .
Has The Gorman-Rupp Company Been A Good Investment?
I think that the total shareholder return of 54%, over three years, would leave most The Gorman-Rupp Company shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
It appears that The Gorman-Rupp Company remunerates its CEO below most similar sized companies. Considering the underlying business is growing earnings, this would suggest the pay is modest. The strong history of shareholder returns might even have some thinking that Jeffrey Gorman deserves a raise!
It is relatively rare to see a modestly paid CEO when performance is so impressive. But it is even better if company insiders are also buying shares with their own money. Whatever your view on compensation, you might want to check if insiders are buying or selling Gorman-Rupp shares (free trial).
Or you might rather take a peek at this analytical visualization of historic cash flow, earnings and revenue.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.