As many shareholders of PRA Group, Inc. (NASDAQ:PRAA) will be aware, they have not made a gain on their investment in the past three years. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 10 June 2021. They could also influence management through voting on resolutions such as executive remuneration. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.
Comparing PRA Group, Inc.'s CEO Compensation With the industry
Our data indicates that PRA Group, Inc. has a market capitalization of US$1.8b, and total annual CEO compensation was reported as US$5.5m for the year to December 2020. That's a notable increase of 17% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$925k.
On comparing similar companies from the same industry with market caps ranging from US$1.0b to US$3.2b, we found that the median CEO total compensation was US$5.7m. So it looks like PRA Group compensates Kevin Stevenson in line with the median for the industry. Moreover, Kevin Stevenson also holds US$11m worth of PRA Group stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
On an industry level, roughly 17% of total compensation represents salary and 83% is other remuneration. PRA Group is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
A Look at PRA Group, Inc.'s Growth Numbers
PRA Group, Inc. has seen its earnings per share (EPS) increase by 11% a year over the past three years. In the last year, its revenue is up 7.8%.
Shareholders would be glad to know that the company has improved itself over the last few years. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. 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 PRA Group, Inc. Been A Good Investment?
With a three year total loss of 1.4% for the shareholders, PRA Group, Inc. would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be less generous with CEO compensation.
Shareholders have not seen their shares grow in value, rather they have seen their shares decline. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We did our research and spotted 2 warning signs for PRA Group that investors should look into moving forward.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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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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