Is Penske Automotive Group Inc (NYSE:PAG) Excessively Paying Its CEO?

Roger Penske became the CEO of Penske Automotive Group Inc (NYSE:PAG) in 1999. First, this article will compare CEO compensation with compensation at similar sized companies. Next, we’ll consider growth that the business demonstrates. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.

View our latest analysis for Penske Automotive Group

How Does Roger Penske’s Compensation Compare With Similar Sized Companies?

Our data indicates that Penske Automotive Group Inc is worth US$3.8b, and total annual CEO compensation is US$7m. That’s a modest increase of 4.1% on the prior year year. We looked at a group of companies with market capitalizations from US$2.0b to US$6.4b, and the median CEO compensation was US$5m.

Thus we can conclude that Roger Penske receives more in total compensation than the median of a group of companies in the same market, and of similar size to Penske Automotive Group Inc. However, this doesn’t necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.

You can see, below, how CEO compensation at Penske Automotive Group has changed over time.

NYSE:PAG CEO Compensation November 9th 18
NYSE:PAG CEO Compensation November 9th 18

Is Penske Automotive Group Inc Growing?

Penske Automotive Group Inc has increased its earnings per share (EPS) by an average of 32% a year, over the last three years In the last year, its revenue is up 8.9%.

This demonstrates that the company has been improving recently. A good result. It’s nice to see a little revenue growth, as this is consistent with healthy business conditions. So this free visual report on analyst forecasts could hold they key to an excellent investment decision.

Has Penske Automotive Group Inc Been A Good Investment?

Since shareholders would have lost about 0.3% over three years, some Penske Automotive Group Inc shareholders would surely be feeling negative emotions. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.

In Summary…

We compared total CEO remuneration at Penske Automotive Group Inc with the amount paid at companies with a similar market capitalization. We found that it pays well over the median amount paid in the benchmark group.

However, the earnings per share growth over three years is certainly impressive. However, the returns to investors are far less impressive, over the same period. While EPS is positive, we’d say shareholders would want better returns before the CEO is paid much more. Sometimes, highly paid CEOs create a lot of value for shareholders. Still, shareholders might want to check if insiders have been selling.

But note: Penske Automotive Group may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.