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James Harrison became the CEO of Party City Holdco Inc. (NYSE:PRTY) in 2014. 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 – 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.
How Does James Harrison’s Compensation Compare With Similar Sized Companies?
According to our data, Party City Holdco Inc. has a market capitalization of US$1.1b, and pays its CEO total annual compensation worth US$2.9m. (This figure is for the year to 2017). We think total compensation is more important but we note that the CEO salary is lower, at US$1.8m. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$400m to US$1.6b. The median total CEO compensation was US$2.2m.
As you can see, James Harrison is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Party City Holdco Inc. is paying too much. 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?
Over the last three years Party City Holdco Inc. has grown its earnings per share (EPS) by an average of 70% per year (using a line of best fit). Its revenue is up 3.4% over last year.
This demonstrates that the company has been improving recently. A good result. It’s also good to see modest revenue growth, suggesting the underlying business is healthy. Shareholders might be interested in this free visualization of analyst forecasts.
Has Party City Holdco Inc. Been A Good Investment?
Party City Holdco Inc. has served shareholders reasonably well, with a total return of 25% over three years. But they probably don’t want to see the CEO paid more than is normal for companies around the same size.
We examined the amount Party City Holdco Inc. pays its CEO, and compared it to the amount paid by similar sized companies. We found that it pays well over the median amount paid in the benchmark group.
However we must not forget that the EPS growth has been very strong over three years. Looking at the same time period, we think that the shareholder returns are respectable. So, considering the EPS growth we do not wish to criticize the level of CEO compensation, though we’d recommend further research on management. Whatever your view on compensation, you might want to check if insiders are buying or selling Party City Holdco 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 firstname.lastname@example.org.