In 2013 Mike Willoughby was appointed CEO of PFSweb, Inc. (NASDAQ:PFSW). 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. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Mike Willoughby’s Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that PFSweb, Inc. has a market cap of US$92m, and reported total annual CEO compensation of US$1.6m for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$538k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. We took a group of companies with market capitalizations below US$200m, and calculated the median CEO total compensation to be US$515k.
Thus we can conclude that Mike Willoughby receives more in total compensation than the median of a group of companies in the same market, and of similar size to PFSweb, 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 PFSweb, below.
Is PFSweb, Inc. Growing?
Over the last three years PFSweb, Inc. has grown its earnings per share (EPS) by an average of 92% per year (using a line of best fit). In the last year, its revenue is down 7.4%.
This shows that the company has improved itself over the last few years. Good news for shareholders. While it would be good to see revenue growth, profits matter more in the end. You might want to check this free visual report on analyst forecasts for future earnings.
Has PFSweb, Inc. Been A Good Investment?
Since shareholders would have lost about 40% over three years, some PFSweb, Inc. shareholders would surely be feeling negative emotions. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.
We compared the total CEO remuneration paid by PFSweb, Inc., and compared it to remuneration at a group of similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.
However, the earnings per share growth over three years is certainly impressive. However, the returns to investors are far less impressive, over the same period. One might thus conclude that it would be better if the company waited until growth is reflected in the share price, before increasing CEO compensation. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling PFSweb (free visualization of insider trades).
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity 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.
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