How Should Investors React To Party City Holdco Inc.’s (NYSE:PRTY) CEO Pay?

Jim Harrison has been the CEO of Party City Holdco Inc. (NYSE:PRTY) since 2014. First, this article will compare CEO compensation with compensation at similar sized companies. Next, we’ll consider growth that the business demonstrates. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.

View our latest analysis for Party City Holdco

How Does Jim Harrison’s Compensation Compare With Similar Sized Companies?

According to our data, Party City Holdco Inc. has a market capitalization of US$448m, and pays its CEO total annual compensation worth US$2.5m. (This is based on the year to December 2018). We think total compensation is more important but we note that the CEO salary is lower, at US$1.8m. We looked at a group of companies with market capitalizations from US$200m to US$800m, and the median CEO total compensation was US$1.8m.

Thus we can conclude that Jim Harrison receives more in total compensation than the median of a group of companies in the same market, and of similar size to Party City Holdco Inc.. However, this doesn’t necessarily mean the pay is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.

You can see a visual representation of the CEO compensation at Party City Holdco, below.

NYSE:PRTY CEO Compensation, August 10th 2019
NYSE:PRTY CEO Compensation, August 10th 2019

Is Party City Holdco Inc. Growing?

Over the last three years Party City Holdco Inc. has grown its earnings per share (EPS) by an average of 20% per year (using a line of best fit). Revenue was pretty flat on last year.

This demonstrates that the company has been improving recently. A good result. It’s good to see a bit of revenue growth, as this suggests the business is able to grow sustainably.

Has Party City Holdco Inc. Been A Good Investment?

With a three year total loss of 75%, Party City Holdco Inc. would certainly have some dissatisfied shareholders. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.

In Summary…

We compared total CEO remuneration at Party City Holdco Inc. with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of that group.

However, the earnings per share growth over three years is certainly impressive. On the other hand returns to investors over the same period have probably disappointed many. One might thus conclude that it would be better if the company waited until growth is reflected in the share price, before increasing CEO compensation. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Party City Holdco (free visualization of insider trades).

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.