D. Patterson has been the CEO of FirstService Corporation (TSE:FSV) since 2015, and this article will examine the executive’s compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
How Does Total Compensation For D. Patterson Compare With Other Companies In The Industry?
At the time of writing, our data shows that FirstService Corporation has a market capitalization of CA$6.7b, and reported total annual CEO compensation of US$4.5m for the year to December 2019. Notably, that’s an increase of 13% over the year before. While this analysis focuses on total compensation, it’s worth acknowledging that the salary portion is lower, valued at US$614k.
On comparing similar companies from the same industry with market caps ranging from CA$5.3b to CA$16b, we found that the median CEO total compensation was US$1.4m. Accordingly, our analysis reveals that FirstService Corporation pays D. Patterson north of the industry median. Moreover, D. Patterson also holds CA$154m worth of FirstService stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Talking in terms of the broader industry, salary and other compensation roughly make up 50% each, of the total compensation. FirstService sets aside a smaller share of compensation for salary, in comparison to the overall 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 FirstService Corporation’s Growth Numbers
Over the past three years, FirstService Corporation has seen its earnings per share (EPS) grow by 3.8% per year. In the last year, its revenue is up 26%.
We like the look of the strong year-on-year improvement in revenue. And in that context, the modest EPS improvement certainly isn’t shabby. We’d stop short of saying the business performance is amazing, but there are enough positives to justify further research, or even adding the stock to your watch-list. 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 FirstService Corporation Been A Good Investment?
Boasting a total shareholder return of 93% over three years, FirstService Corporation has done well by shareholders. 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.
As we noted earlier, FirstService pays its CEO higher than the norm for similar-sized companies belonging to the same industry. But shareholder returns have been positive for the last three years. Albeit, earnings growth has not been as impressive over the same time frame. All things considered, we don’t think there’s a reason to criticize CEO compensation, though we hope FirstService will post healthier earnings growth moving forward.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We’ve identified 4 warning signs for FirstService that investors should be aware of in a dynamic business environment.
Switching gears from FirstService, if you’re hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
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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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