E. Steinert has been the CEO of CarGurus, Inc. (NASDAQ:CARG) since 2006, 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 CarGurus.
See our latest analysis for CarGurus
Comparing CarGurus, Inc.'s CEO Compensation With the industry
At the time of writing, our data shows that CarGurus, Inc. has a market capitalization of US$2.4b, and reported total annual CEO compensation of US$2.7m for the year to December 2019. That is, the compensation was roughly the same as last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$50k.
For comparison, other companies in the same industry with market capitalizations ranging between US$1.0b and US$3.2b had a median total CEO compensation of US$2.5m. So it looks like CarGurus compensates E. Steinert in line with the median for the industry. Furthermore, E. Steinert directly owns US$379m worth of shares in the company, implying that they are deeply invested in the company's success.
| Component | 2019 | 2018 | Proportion (2019) |
| Salary | US$50k | US$325k | 2% |
| Other | US$2.6m | US$2.4m | 98% |
| Total Compensation | US$2.7m | US$2.7m | 100% |
Speaking on an industry level, nearly 39% of total compensation represents salary, while the remainder of 61% is other remuneration. Interestingly, the company has chosen to go down an unconventional route in that it pays a smaller salary to E. Steinert as compared to non-salary compensation over the one-year period examined. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
CarGurus, Inc.'s Growth
Over the past three years, CarGurus, Inc. has seen its earnings per share (EPS) grow by 60% per year. Its revenue is up 6.7% over the last year.
This demonstrates that the company has been improving recently and is good news for the shareholders. It's nice to see revenue heading northwards, as this is consistent with healthy business conditions. 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 CarGurus, Inc. Been A Good Investment?
With a three year total loss of 25% for the shareholders, CarGurus, Inc. would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
To Conclude...
CarGurus primarily uses non-salary benefits to reward its CEO. As we noted earlier, CarGurus pays its CEO in line with similar-sized companies belonging to the same industry. At the same time, the company has logged negative shareholder returns over the last three years. However, EPS growth is positive over the same time frame. Overall, we wouldn't say E. is paid an unjustified compensation, but shareholders might not favor a raise before shareholder returns show a positive trend.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 1 warning sign for CarGurus that you should be aware of before investing.
Switching gears from CarGurus, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
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