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Is Designer Brands Inc.'s (NYSE:DBI) CEO Overpaid Relative To Its Peers?

Simply Wall St

Roger Rawlins has been the CEO of Designer Brands Inc. (NYSE:DBI) since 2016. First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.

See our latest analysis for Designer Brands

How Does Roger Rawlins's Compensation Compare With Similar Sized Companies?

Our data indicates that Designer Brands Inc. is worth US$1.2b, and total annual CEO compensation was reported as US$8.3m for the year to February 2019. While we always look at total compensation first, we note that the salary component is less, at US$923k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. We looked at a group of companies with market capitalizations from US$400m to US$1.6b, and the median CEO total compensation was US$2.7m.

It would therefore appear that Designer Brands Inc. pays Roger Rawlins more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

The graphic below shows how CEO compensation at Designer Brands has changed from year to year.

NYSE:DBI CEO Compensation, October 20th 2019

Is Designer Brands Inc. Growing?

Designer Brands Inc. has reduced its earnings per share by an average of 60% a year, over the last three years (measured with a line of best fit). In the last year, its revenue is up 16%.

Unfortunately, earnings per share have trended lower over the last three years. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for me to put aside my concerns around earnings. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. You might want to check this free visual report on analyst forecasts for future earnings.

Has Designer Brands Inc. Been A Good Investment?

With a three year total loss of 11%, Designer Brands Inc. would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

We compared total CEO remuneration at Designer Brands Inc. with the amount paid at companies with a similar market capitalization. We found that it pays well over the median amount paid in the benchmark group.

Earnings per share have not grown in three years, and the revenue growth fails to impress us. Over the same period, investors would have come away with nothing in the way of share price gains. Some might well form the view that the CEO is paid too generously! Shareholders may want to check for free if Designer Brands insiders are buying or selling shares.

If you want to buy a stock that is better than Designer Brands, this free list of high return, low debt companies is a great place to look.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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. Thank you for reading.