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How Should Investors Feel About Lithia Motors, Inc.'s (NYSE:LAD) CEO Pay?

In 2012 Bryan DeBoer was appointed CEO of Lithia Motors, Inc. (NYSE:LAD). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we'll look at a snap shot of the business growth. 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.

See our latest analysis for Lithia Motors

How Does Bryan DeBoer's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Lithia Motors, Inc. has a market cap of US$3.4b, and reported total annual CEO compensation of US$5.5m for the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$1.0m. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We examined companies with market caps from US$2.0b to US$6.4b, and discovered that the median CEO total compensation of that group was US$5.1m.

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That means Bryan DeBoer receives fairly typical remuneration for the CEO of a company that size. While this data point isn't particularly informative alone, it gains more meaning when considered with business performance.

You can see a visual representation of the CEO compensation at Lithia Motors, below.

NYSE:LAD CEO Compensation, January 2nd 2020
NYSE:LAD CEO Compensation, January 2nd 2020

Is Lithia Motors, Inc. Growing?

Over the last three years Lithia Motors, Inc. has grown its earnings per share (EPS) by an average of 16% per year (using a line of best fit). Its revenue is up 7.1% over last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. It's nice to see a little revenue growth, as this is consistent with healthy business conditions. You might want to check this free visual report on analyst forecasts for future earnings.

Has Lithia Motors, Inc. Been A Good Investment?

I think that the total shareholder return of 48%, over three years, would leave most Lithia Motors, Inc. shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

Remuneration for Bryan DeBoer is close enough to the median pay for a CEO of a similar sized company .

The company is growing earnings per share and total shareholder returns have been pleasing. So one could argue the CEO compensation is quite modest, if you consider company performance! So you may want to check if insiders are buying Lithia Motors shares with their own money (free access).

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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.