Yahoo Finance Lithia Motors, Inc.'s (NYSE:LAD) CEO Looks Like They Deserve Their Pay Packet
We have been pretty impressed with the performance at Lithia Motors, Inc. (NYSE:LAD) recently and CEO Bryan DeBoer deserves a mention for their role in it. The pleasing results would be something shareholders would keep in mind at the upcoming AGM on 29 April 2021. This would also be a chance for them to hear the board review the financial results, discuss future company strategy and vote on any resolutions such as executive remuneration. We think the CEO has done a pretty decent job and we discuss why the CEO compensation is appropriate.
See our latest analysis for Lithia Motors
How Does Total Compensation For Bryan DeBoer Compare With Other Companies In The Industry?
At the time of writing, our data shows that Lithia Motors, Inc. has a market capitalization of US$10b, and reported total annual CEO compensation of US$8.3m for the year to December 2020. That's a notable increase of 13% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.1m.
On comparing similar companies in the industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$11m. So it looks like Lithia Motors compensates Bryan DeBoer in line with the median for the industry. Moreover, Bryan DeBoer also holds US$90m worth of Lithia Motors stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Component | 2020 | 2019 | Proportion (2020) |
Salary | US$1.1m | US$1.1m | 13% |
Other | US$7.1m | US$6.2m | 87% |
Total Compensation | US$8.3m | US$7.3m | 100% |
On an industry level, roughly 16% of total compensation represents salary and 84% is other remuneration. Lithia Motors sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
A Look at Lithia Motors, Inc.'s Growth Numbers
Over the past three years, Lithia Motors, Inc. has seen its earnings per share (EPS) grow by 34% per year. Its revenue is up 16% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has Lithia Motors, Inc. Been A Good Investment?
Boasting a total shareholder return of 316% over three years, Lithia Motors, Inc. has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
In Summary...
The company's solid performance might have made most shareholders happy, possibly making CEO remuneration the least of the matters to be discussed in the AGM. However, investors will get the chance to engage on key strategic initiatives and future growth opportunities for the company and set their longer-term expectations.
We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 3 warning signs (and 1 which is concerning) in Lithia Motors we think you should know about.
Important note: Lithia Motors is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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. 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.
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