How Should Investors React To Federal Signal Corporation’s (NYSE:FSS) CEO Pay?

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In 2016 Jennifer Sherman was appointed CEO of Federal Signal Corporation (NYSE:FSS). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we’ll look at a snap shot of the business growth. 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.

See our latest analysis for Federal Signal

How Does Jennifer Sherman’s Compensation Compare With Similar Sized Companies?

Our data indicates that Federal Signal Corporation is worth US$1.3b, and total annual CEO compensation is US$3.4m. (This is based on the year to 2017). We think total compensation is more important but we note that the CEO salary is lower, at US$666k. We looked at a group of companies with market capitalizations from US$1.0b to US$3.2b, and the median CEO compensation was US$3.4m.

So Jennifer Sherman receives a similar amount to the median CEO pay, amongst 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 Federal Signal has changed from year to year.

NYSE:FSS CEO Compensation February 14th 19
NYSE:FSS CEO Compensation February 14th 19

Is Federal Signal Corporation Growing?

Over the last three years Federal Signal Corporation has grown its earnings per share (EPS) by an average of 11% per year (using a line of best fit). Its revenue is up 28% over last year.

This demonstrates that the company has been improving recently. A good result. It’s great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. It could be important to check this free visual depiction of what analysts expect for the future.

Has Federal Signal Corporation Been A Good Investment?

Most shareholders would probably be pleased with Federal Signal Corporation for providing a total return of 58% over three years. This strong performance might mean some shareholders don’t mind if the CEO were to be paid more than is normal for a company of its size.

In Summary…

Jennifer Sherman is paid around the same as most CEOs of similar size companies.

Shareholders would surely be happy to see that shareholder returns have been great, and the earnings per share are up. Indeed, many might consider the pay rather modest, given the solid company performance! Whatever your view on compensation, you might want to check if insiders are buying or selling Federal Signal shares (free trial).

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

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.