Is Emmis Communications Corporation's (NASDAQ:EMMS) CEO Paid Enough Relative To Peers?
Jeff Smulyan has been the CEO of Emmis Communications Corporation (NASDAQ:EMMS) since 1981. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.
View our latest analysis for Emmis Communications
How Does Jeff Smulyan's Compensation Compare With Similar Sized Companies?
Our data indicates that Emmis Communications Corporation is worth US$24m, and total annual CEO compensation was reported as US$2.6m for the year to February 2019. We think total compensation is more important but we note that the CEO salary is lower, at US$1.0m. We looked at a group of companies with market capitalizations under US$200m, and the median CEO total compensation was US$622k.
Pay mix tells us a lot about how a company functions versus the wider industry, and it's no different in the case of Emmis Communications. Talking in terms of the sector, salary represented approximately 22% of total compensation out of all the companies we analysed, while other remuneration made up 78% of the pie. Emmis Communications is paying a higher share of its remuneration through a salary in comparison to the overall industry.
As you can see, Jeff Smulyan is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Emmis Communications Corporation 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 Emmis Communications, below.
Is Emmis Communications Corporation Growing?
On average over the last three years, Emmis Communications Corporation has shrunk earnings per share by 31% each year (measured with a line of best fit). Its revenue is up 84% over last year.
The reduction in earnings per share, over three years, is arguably concerning. But in contrast the revenue growth is strong, suggesting future potential for earnings growth. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has Emmis Communications Corporation Been A Good Investment?
Since shareholders would have lost about 18% over three years, some Emmis Communications Corporation shareholders would surely be feeling negative emotions. It therefore might be upsetting for shareholders if the CEO were paid generously.
In Summary...
We compared total CEO remuneration at Emmis Communications Corporation with the amount paid at companies with a similar market capitalization. Our data suggests that it pays above the median CEO pay within that group.
While we have not been overly impressed by the business performance, the shareholder returns, over three years, have been disappointing. Although we'd stop short of calling it inappropriate, we think the CEO compensation is probably more on the generous side of things. Taking a breather from CEO compensation, we've spotted 4 warning signs for Emmis Communications (of which 1 can't be ignored!) you should know about in order to have a holistic understanding of the stock.
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 editorial-team@simplywallst.com. 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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