In 2007 James Park was appointed CEO of Fitbit, Inc. (NYSE:FIT). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we’ll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.
How Does James Park’s Compensation Compare With Similar Sized Companies?
Our data indicates that Fitbit, Inc. is worth US$1.0b, and total annual CEO compensation was reported as US$3.4m for the year to December 2018. While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$801k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. When we examined a selection of companies with market caps ranging from US$400m to US$1.6b, we found the median CEO total compensation was US$2.7m.
So James Park is paid around the average of the companies we looked at. Although this fact alone doesn’t tell us a great deal, it becomes more relevant when considered against the business performance.
The graphic below shows how CEO compensation at Fitbit has changed from year to year.
Is Fitbit, Inc. Growing?
Over the last three years Fitbit, Inc. has shrunk its earnings per share by an average of 36% per year (measured with a line of best fit). In the last year, its revenue is up 2.6%.
Few shareholders would be pleased to read that earnings per share are lower over three years. And the modest revenue growth over 12 months isn’t much comfort against the reduced earnings per share. These factors suggest that the business performance wouldn’t really justify a high pay packet for the CEO. It could be important to check this free visual depiction of what analysts expect for the future.
Has Fitbit, Inc. Been A Good Investment?
Since shareholders would have lost about 72% over three years, some Fitbit, Inc. shareholders would surely be feeling negative emotions. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.
James Park is paid around what is normal the leaders of comparable size companies.
The company isn’t growing EPS, and shareholder returns have been disappointing. Suffice it to say, we don’t think the CEO is underpaid! CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Fitbit (free visualization of insider trades).
If you want to buy a stock that is better than Fitbit, this free list of high return, low debt companies is a great place to look.
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