Rich Williams has been the CEO of Groupon, Inc. (NASDAQ:GRPN) since 2015. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we'll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Rich Williams's Compensation Compare With Similar Sized Companies?
Our data indicates that Groupon, Inc. is worth US$1.6b, and total annual CEO compensation was reported as US$10m for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$750k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. When we examined a selection of companies with market caps ranging from US$1.0b to US$3.2b, we found the median CEO total compensation was US$4.0m.
As you can see, Rich Williams is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Groupon, Inc. is paying too much. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
You can see, below, how CEO compensation at Groupon has changed over time.
Is Groupon, Inc. Growing?
Groupon, Inc. has increased its earnings per share (EPS) by an average of 81% a year, over the last three years (using a line of best fit). In the last year, its revenue is down 9.0%.
This shows that the company has improved itself over the last few years. Good news for shareholders. While it would be good to see revenue growth, profits matter more in the end. You might want to check this free visual report on analyst forecasts for future earnings.
Has Groupon, Inc. Been A Good Investment?
Since shareholders would have lost about 29% over three years, some Groupon, Inc. shareholders would surely be feeling negative emotions. It therefore might be upsetting for shareholders if the CEO were paid generously.
We examined the amount Groupon, Inc. pays its CEO, and compared it to the amount paid by similar sized companies. Our data suggests that it pays above the median CEO pay within that group.
However, the earnings per share growth over three years is certainly impressive. On the other hand returns to investors over the same period have probably disappointed many. One might thus conclude that it would be better if the company waited until growth is reflected in the share price, before increasing CEO compensation. Shareholders may want to check for free if Groupon insiders are buying or selling shares.
If you want to buy a stock that is better than Groupon, this free list of high return, low debt companies is a great place to look.
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If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.