Yahoo Finance Is Carvana Co.'s (NYSE:CVNA) CEO Paid At A Competitive Rate?
Ernie Garcia has been the CEO of Carvana Co. (NYSE:CVNA) since 2012. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. 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 method should give us information to assess how appropriately the company pays the CEO.
View our latest analysis for Carvana
How Does Ernie Garcia's Compensation Compare With Similar Sized Companies?
Our data indicates that Carvana Co. is worth US$17b, and total annual CEO compensation was reported as US$3.0m for the year to December 2019. We note that's an increase of 42% above last year. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$885k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. When we examined a group of companies with market caps over US$8.0b, we found that their median CEO total compensation was US$12m. (We took a wide range because the CEOs of massive companies tend to be paid similar amounts - even though some are quite a bit bigger than others).
Pay mix tells us a lot about how a company functions versus the wider industry, and it's no different in the case of Carvana. On a sector level, around 20% of total compensation represents salary and 80% is other remuneration. Carvana pays out 30% of aggregate payment in the shape of a salary, which is significantly higher than the industry average.
At first glance this seems like a real positive for shareholders, since Ernie Garcia is paid less than the average total compensation paid by other large companies. Though positive, it's important we delve into the performance of the actual business. The graphic below shows how CEO compensation at Carvana has changed from year to year.
Is Carvana Co. Growing?
Carvana Co. has seen earnings per share (EPS) move positively by an average of 39% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 82%.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. You might want to check this free visual report on analyst forecasts for future earnings.
Has Carvana Co. Been A Good Investment?
Most shareholders would probably be pleased with Carvana Co. for providing a total return of 847% 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...
It appears that Carvana Co. remunerates its CEO below most large companies.
Many would consider this to indicate that the pay is modest since the business is growing. The strong history of shareholder returns might even have some thinking that Ernie Garcia deserves a raise! Most shareholders like to see a modestly paid CEO combined with strong performance by the company. But it is even better if company insiders are also buying shares with their own money. Looking into other areas, we've picked out 3 warning signs for Carvana that investors should think about before committing capital to this stock.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
Love or hate this article? Concerned about the content? Get in touch with us directly. Alternatively, email 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. 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. Thank you for reading.