This article will reflect on the compensation paid to D. Patterson who has served as CEO of FirstService Corporation (TSE:FSV) since 2015. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for FirstService.
Check out our latest analysis for FirstService
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$7.6b, and reported total annual CEO compensation of US$4.5m for the year to December 2019. That's a notable increase of 13% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$614k.
In comparison with other companies in the industry with market capitalizations ranging from CA$5.1b to CA$15b, the reported median CEO total compensation was US$1.6m. Hence, we can conclude that D. Patterson is remunerated higher than the industry median. What's more, D. Patterson holds CA$169m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
| Component | 2019 | 2018 | Proportion (2019) |
| Salary | US$614k | US$608k | 14% |
| Other | US$3.9m | US$3.4m | 86% |
| Total Compensation | US$4.5m | US$4.0m | 100% |
On an industry level, around 46% of total compensation represents salary and 54% is other remuneration. It's interesting to note that FirstService allocates a smaller portion of compensation to salary in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
FirstService Corporation's Growth
FirstService Corporation's earnings per share (EPS) grew 11% per year over the last three years. In the last year, its revenue is up 19%.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has FirstService Corporation Been A Good Investment?
Most shareholders would probably be pleased with FirstService Corporation for providing a total return of 94% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
To Conclude...
As previously discussed, D. is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. But EPS growth and shareholder returns have been top-notch for the past three years. So, in acknowledgment of the overall excellent performance, we believe CEO compensation is appropriate. The pleasing shareholder returns are the cherry on top. We wouldn't be wrong in saying that shareholders feel that D.'s performance creates value for the company.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 3 warning signs for FirstService that investors should think about before committing capital to this stock.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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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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About TSX:FSV
FirstService
Provides residential property management and other essential property services to residential and commercial customers in the United States and Canada.
Reasonable growth potential with adequate balance sheet.
