Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
Cliff Pemble has been the CEO of Garmin Ltd. (NASDAQ:GRMN) since 2013. First, this article will compare CEO compensation with compensation at other large companies. Then we’ll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Cliff Pemble’s Compensation Compare With Similar Sized Companies?
Our data indicates that Garmin Ltd. is worth US$15b, and total annual CEO compensation is US$2.9m. (This number is for the twelve months until December 2018). That’s a notable increase of 21% on last year. While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$900k. We took a group of companies with market capitalizations over US$8.0b, and calculated the median CEO total compensation to be US$11m. (We took a wide range because the CEOs of massive companies tend to be paid similar amounts – even though some are quite a bit bigger than others).
A first glance this seems like a real positive for shareholders, since Cliff Pemble is paid less than the average total compensation paid by other large companies. Though positive, it’s important we delve into the performance of the actual business.
You can see, below, how CEO compensation at Garmin has changed over time.
Is Garmin Ltd. Growing?
Garmin Ltd. 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 6.7% over last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. It’s also good to see modest revenue growth, suggesting the underlying business is healthy. Shareholders might be interested in this free visualization of analyst forecasts.
Has Garmin Ltd. Been A Good Investment?
I think that the total shareholder return of 114%, over three years, would leave most Garmin Ltd. 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.
It looks like Garmin Ltd. pays its CEO less than the average at large companies. Many would consider this to indicate that the pay is modest since the business is growing. The pleasing shareholder returns are the cherry on top; you might even consider that Cliff Pemble deserves a raise!
Most shareholders like to see a modestly paid CEO combined with strong performance by the company. 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 Garmin shares (free trial).
Important note: Garmin may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.