What Does Garmin's (NASDAQ:GRMN) CEO Pay Reveal?

By
Simply Wall St
Published
December 18, 2020

Cliff Albert Pemble has been the CEO of Garmin Ltd. (NASDAQ:GRMN) since 2013, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Garmin.

Check out our latest analysis for Garmin

How Does Total Compensation For Cliff Albert Pemble Compare With Other Companies In The Industry?

According to our data, Garmin Ltd. has a market capitalization of US$23b, and paid its CEO total annual compensation worth US$3.2m over the year to December 2019. That's a notable increase of 10% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.0m.

For comparison, other companies in the industry with market capitalizations above US$8.0b, reported a median total CEO compensation of US$9.2m. This suggests that Cliff Albert Pemble is paid below the industry median. What's more, Cliff Albert Pemble holds US$11m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component20192018Proportion (2019)
Salary US$1.0m US$900k 31%
Other US$2.2m US$2.0m 69%
Total CompensationUS$3.2m US$2.9m100%

Talking in terms of the industry, salary represented approximately 27% of total compensation out of all the companies we analyzed, while other remuneration made up 73% of the pie. It's interesting to note that Garmin pays out a greater portion of remuneration through salary, compared to the industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

NasdaqGS:GRMN CEO Compensation December 18th 2020

Garmin Ltd.'s Growth

Garmin Ltd. has seen its earnings per share (EPS) increase by 13% a year over the past three years. In the last year, its revenue is up 9.8%.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's also good to see modest revenue growth, suggesting the underlying business is healthy. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Garmin Ltd. Been A Good Investment?

Most shareholders would probably be pleased with Garmin Ltd. for providing a total return of 118% over three years. 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.

In Summary...

As we touched on above, Garmin Ltd. is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Considering robust EPS growth, we believe Cliff to be modestly paid. Plus, we can't ignore the impressive shareholder returns, and won't be surprised if some shareholders were to reward such excellent all-around performance with a raise.

CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 1 warning sign for Garmin that investors should look into moving forward.

Important note: Garmin is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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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