Is FreightCar America, Inc.’s (NASDAQ:RAIL) CEO Salary Justified?

Jim Meyer has been the CEO of FreightCar America, Inc. (NASDAQ:RAIL) since 2017. First, this article will compare CEO compensation with compensation at similar sized 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 FreightCar America

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

Our data indicates that FreightCar America, Inc. is worth US$26m, and total annual CEO compensation was reported as US$1.1m for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$500k. We took a group of companies with market capitalizations below US$200m, and calculated the median CEO total compensation to be US$524k.

It would therefore appear that FreightCar America, Inc. pays Jim Meyer more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn’t mean the remuneration is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

You can see a visual representation of the CEO compensation at FreightCar America, below.

NasdaqGS:RAIL CEO Compensation, January 8th 2020
NasdaqGS:RAIL CEO Compensation, January 8th 2020

Is FreightCar America, Inc. Growing?

On average over the last three years, FreightCar America, Inc. has shrunk earnings per share by 101% each year (measured with a line of best fit). In the last year, its revenue is down 11%.

Sadly for shareholders, earnings per share are actually down, over three years. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. It could be important to check this free visual depiction of what analysts expect for the future.

Has FreightCar America, Inc. Been A Good Investment?

Given the total loss of 87% over three years, many shareholders in FreightCar America, Inc. are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary…

We compared the total CEO remuneration paid by FreightCar America, Inc., and compared it to remuneration at a group of similar sized companies. We found that it pays well over the median amount paid in the benchmark group.

Neither earnings per share nor revenue have been growing sufficiently to impress us, over the last three years. Over the same period, investors would have come away with nothing in the way of share price gains. In our opinion the CEO might be paid too generously! Whatever your view on compensation, you might want to check if insiders are buying or selling FreightCar America shares (free trial).

If you want to buy a stock that is better than FreightCar America, this free list of high return, low debt companies is a great place to look.

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.

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