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. After that, we will consider the growth in the business. 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.
How Does Jim Harrison’s Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Party City Holdco Inc. has a market cap of US$56m, and reported total annual CEO compensation of US$2.5m for the year to December 2018. While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$1.8m. We looked at a group of companies with market capitalizations under US$200m, and the median CEO total compensation was US$596k.
Next, let’s break down remuneration compositions to understand how the industry and company compare with each other. On a sector level, around 19% of total compensation represents salary and 81% is other remuneration. It’s interesting to note that Party City Holdco pays out a greater portion of remuneration through salary, in comparison to the wider industry.
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.
Is Party City Holdco Inc. Growing?
On average over the last three years, Party City Holdco Inc. has shrunk earnings per share by 68% each year (measured with a line of best fit). In the last year, its revenue is down 3.2%.
Sadly for shareholders, earnings per share are actually down, over three years. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Shareholders might be interested in this free visualization of analyst forecasts.
Has Party City Holdco Inc. Been A Good Investment?
Since shareholders would have lost about 96% over three years, some Party City Holdco Inc. shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
We compared the total CEO remuneration paid by Party City Holdco Inc., and compared it to remuneration at a group of similar sized companies. Our data suggests that it pays above the median CEO pay within that group.
Earnings per share have not grown in three years, and the revenue growth fails to impress us. Arguably worse, investors are without a positive return for the last three years. This analysis suggests to us that the CEO is paid too generously! Taking a breather from CEO compensation, we’ve spotted 3 warning signs for Party City Holdco (of which 1 is significant!) you should know about in order to have a holistic understanding of the stock.
Important note: Party City Holdco 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.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.
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. Thank you for reading.