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Gary Burnison has been the CEO of Korn Ferry (NYSE:KFY) since 2007, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether Korn Ferry pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Comparing Korn Ferry's CEO Compensation With the industry
According to our data, Korn Ferry has a market capitalization of US$2.5b, and paid its CEO total annual compensation worth US$4.4m over the year to April 2020. That's a notable decrease of 52% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$910k.
On comparing similar companies from the same industry with market caps ranging from US$2.0b to US$6.4b, we found that the median CEO total compensation was US$6.6m. That is to say, Gary Burnison is paid under the industry median. Moreover, Gary Burnison also holds US$24m worth of Korn Ferry stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
On an industry level, roughly 22% of total compensation represents salary and 78% is other remuneration. Korn Ferry is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
A Look at Korn Ferry's Growth Numbers
Over the last three years, Korn Ferry has shrunk its earnings per share by 48% per year. Its revenue is down 11% over the previous year.
The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has Korn Ferry Been A Good Investment?
Korn Ferry has served shareholders reasonably well, with a total return of 13% over three years. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
As we touched on above, Korn Ferry is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Shareholder returns have been uninspiring, but EPS growth has arguably been worse, over the last three years. So, although we can't say CEO compensation is very high, shareholders might want to see an improvement in overall performance before agreeing that Gary deserves a bump.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 4 warning signs for Korn Ferry that investors should think about before committing capital to this 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.
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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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