Shareholders May Not Be So Generous With Arko Corp.'s (NASDAQ:ARKO) CEO Compensation And Here's Why

Key Insights

• Arko to hold its Annual General Meeting on 6th of June
• CEO Arie Kotler's total compensation includes salary of US$1.15m
• Total compensation is 31% above industry average
• Over the past three years, Arko's EPS grew by 68% and over the past three years, the total loss to shareholders 44%

The underwhelming share price performance of Arko Corp. (NASDAQ:ARKO) in the past three years would have disappointed many shareholders. 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 6th of June. They could also influence management through voting on resolutions such as executive remuneration. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.

Check out our latest analysis for Arko

How Does Total Compensation For Arie Kotler Compare With Other Companies In The Industry?

At the time of writing, our data shows that Arko Corp. has a market capitalization of US$669m, and reported total annual CEO compensation of US$6.0m for the year to December 2023. That's a notable decrease of 9.5% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.1m.

In comparison with other companies in the American Specialty Retail industry with market capitalizations ranging from US$400m to US$1.6b, the reported median CEO total compensation was US$4.6m. Hence, we can conclude that Arie Kotler is remunerated higher than the industry median. Moreover, Arie Kotler also holds US$68m worth of Arko stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	US$1.1m	US$1.1m	19%
Other	US$4.9m	US$5.6m	81%
Total Compensation	US$6.0m	US$6.7m	100%

On an industry level, around 17% of total compensation represents salary and 83% is other remuneration. Arko pays out 19% of remuneration in the form of a salary, significantly higher than the industry average. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at Arko Corp.'s Growth Numbers

Arko Corp.'s earnings per share (EPS) grew 68% per year over the last three years. It achieved revenue growth of 1.5% over the last year.

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 Arko Corp. Been A Good Investment?

The return of -44% over three years would not have pleased Arko Corp. shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 4 warning signs (and 1 which doesn't sit too well with us) in Arko we think you should know about.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.