Yahoo Finance A Look At CarMax's (NYSE:KMX) CEO Remuneration
Bill Nash has been the CEO of CarMax, Inc. (NYSE:KMX) since 2016, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether CarMax pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
View our latest analysis for CarMax
How Does Total Compensation For Bill Nash Compare With Other Companies In The Industry?
According to our data, CarMax, Inc. has a market capitalization of US$17b, and paid its CEO total annual compensation worth US$9.4m over the year to February 2020. That's a modest increase of 5.0% on the prior year. While we always look at total compensation first, our analysis shows that the salary component is less, 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 CarMax compensates Bill Nash in line with the median for the industry. Furthermore, Bill Nash directly owns US$12m worth of shares in the company, implying that they are deeply invested in the company's success.
Component | 2020 | 2019 | Proportion (2020) |
Salary | US$1.1m | US$1.1m | 12% |
Other | US$8.3m | US$7.9m | 88% |
Total Compensation | US$9.4m | US$9.0m | 100% |
Talking in terms of the industry, salary represented approximately 20% of total compensation out of all the companies we analyzed, while other remuneration made up 80% of the pie. It's interesting to note that CarMax allocates a smaller portion of compensation to salary in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
A Look at CarMax, Inc.'s Growth Numbers
Over the past three years, CarMax, Inc. has seen its earnings per share (EPS) grow by 2.8% per year. In the last year, its revenue is down 2.3%.
We generally like to see a little revenue growth, but it is good to see a modest EPS growth at least. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has CarMax, Inc. Been A Good Investment?
Most shareholders would probably be pleased with CarMax, Inc. for providing a total return of 38% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
In Summary...
As previously discussed, Bill is compensated close to the median for companies of its size, and which belong to the same industry. However, the company's EPS growth numbers over the last three years is not that impressive. Meanwhile, shareholder returns have remained positive over the same time frame. We would like to see EPS growth from the business, although we wouldn't say the CEO compensation is high.
CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 2 warning signs for CarMax (of which 1 is significant!) that you should know about in order to have a holistic understanding of the stock.
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.
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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