In 2017 Jason Randall was appointed CEO of AppFolio, Inc. (NASDAQ:APPF). 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. 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.
How Does Jason Randall's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that AppFolio, Inc. has a market cap of US$3.5b, and reported total annual CEO compensation of US$663k for the year to December 2019. That's actually a decrease on the year before. We think total compensation is more important but we note that the CEO salary is lower, at US$360k. We examined companies with market caps from US$2.0b to US$6.4b, and discovered that the median CEO total compensation of that group was US$5.8m.
Next, let's break down remuneration compositions to understand how the industry and company compare with each other. Speaking on an industry level, we can see that nearly 13% of total compensation represents salary, while the remainder of 87% is other remuneration. It's interesting to note that AppFolio pays out a greater portion of remuneration through salary, in comparison to the wider industry.
Most shareholders would consider it a positive that Jason Randall takes less total compensation than the CEOs of most similar size companies, leaving more for shareholders. While this is a good thing, you'll need to understand the business better before you can form an opinion. You can see a visual representation of the CEO compensation at AppFolio, below.
Is AppFolio, Inc. Growing?
AppFolio, Inc. has seen earnings per share (EPS) move positively by an average of 84% a year, over the last three years (using a line of best fit). It achieved revenue growth of 35% over the last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. The combination of strong revenue growth with medium-term earnings per share improvement certainly points to the kind of growth I like to see. It could be important to check this free visual depiction of what analysts expect for the future.
Has AppFolio, Inc. Been A Good Investment?
I think that the total shareholder return of 289%, over three years, would leave most AppFolio, Inc. shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
It looks like AppFolio, Inc. pays its CEO less than similar sized companies.
Since the business is growing, many would argue this suggests the pay is modest. The strong history of shareholder returns might even have some thinking that Jason Randall deserves a raise! It is relatively rare to see a modestly paid CEO when performance is so impressive. It would be even more positive if company insiders are buying shares. On another note, AppFolio has 3 warning signs (and 2 which can't be ignored) we think you should know about.
If you want to buy a stock that is better than AppFolio, this free list of high return, low debt companies is a great place to look.
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