We Think Shareholders Will Probably Be Generous With Genuine Parts Company's (NYSE:GPC) CEO Compensation

Key Insights

• Genuine Parts to hold its Annual General Meeting on 29th of April
• Salary of US$1.25m is part of CEO Paul Donahue's total remuneration
• Total compensation is similar to the industry average
• Genuine Parts' total shareholder return over the past three years was 43% while its EPS grew by 72% over the past three years

The performance at Genuine Parts Company (NYSE:GPC) has been quite strong recently and CEO Paul Donahue has played a role in it. The pleasing results would be something shareholders would keep in mind at the upcoming AGM on 29th of April. The focus will probably be on the future company strategy as shareholders cast their votes on resolutions such as executive remuneration and other matters. We think the CEO has done a pretty decent job and we discuss why the CEO compensation is appropriate.

See our latest analysis for Genuine Parts

How Does Total Compensation For Paul Donahue Compare With Other Companies In The Industry?

At the time of writing, our data shows that Genuine Parts Company has a market capitalization of US$23b, and reported total annual CEO compensation of US$11m for the year to December 2023. That's a notable increase of 9.8% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.2m.

For comparison, other companies in the American Retail Distributors industry with market capitalizations above US$8.0b, reported a median total CEO compensation of US$11m. So it looks like Genuine Parts compensates Paul Donahue in line with the median for the industry. Furthermore, Paul Donahue directly owns US$21m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	US$1.2m	US$1.2m	11%
Other	US$10m	US$9.1m	89%
Total Compensation	US$11m	US$10m	100%

On an industry level, roughly 45% of total compensation represents salary and 55% is other remuneration. It's interesting to note that Genuine Parts allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Genuine Parts Company's Growth

Genuine Parts Company's earnings per share (EPS) grew 72% per year over the last three years. It achieved revenue growth of 2.4% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. 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 Genuine Parts Company Been A Good Investment?

Most shareholders would probably be pleased with Genuine Parts Company for providing a total return of 43% 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...

Given the company's decent performance, the CEO remuneration policy might not be shareholders' central point of focus in the AGM. Instead, investors might be more interested in discussions that would help manage their longer-term growth expectations such as company business strategies and future growth potential.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 1 warning sign for Genuine Parts that you should be aware of before investing.

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.