In 2016 Tom Greco was appointed CEO of Advance Auto Parts, Inc. (NYSE:AAP). 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. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.
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How Does Tom Greco's Compensation Compare With Similar Sized Companies?
Our data indicates that Advance Auto Parts, Inc. is worth US$12b, and total annual CEO compensation is US$8.9m. (This is based on the year to December 2018). Notably, that's an increase of 45% over the year before. We think total compensation is more important but we note that the CEO salary is lower, at US$1.1m. 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).
That means Tom Greco receives fairly typical remuneration for the CEO of a large company. This doesn't tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context.
You can see a visual representation of the CEO compensation at Advance Auto Parts, below.
Is Advance Auto Parts, Inc. Growing?
Over the last three years Advance Auto Parts, Inc. has grown its earnings per share (EPS) by an average of 2.1% per year (using a line of best fit). In the last year, its revenue is up 2.2%.
I would argue that the improvement in revenue isn't particularly impressive, but it is good to see modest EPS growth. Considering these factors I'd say performance has been pretty decent, though not amazing. It could be important to check this free visual depiction of what analysts expect for the future.
Has Advance Auto Parts, Inc. Been A Good Investment?
Advance Auto Parts, Inc. has not done too badly by shareholders, with a total return of 5.6%, over three years. But they would probably prefer not to see CEO compensation far in excess of the median.
Remuneration for Tom Greco is close enough to the median pay for a CEO of a large company .
We think many would like to see better growth. But we don't think the CEO compensation is a problem. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Advance Auto Parts (free visualization of insider trades).
Important note: Advance Auto Parts may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
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