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In 2016 Patrick Walsh was appointed CEO of Town Sports International Holdings, Inc. (NASDAQ:CLUB). First, this article will compare CEO compensation with compensation at similar sized companies. Then we'll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Patrick Walsh's Compensation Compare With Similar Sized Companies?
At the time of writing our data says that Town Sports International Holdings, Inc. has a market cap of US$128m, and is paying total annual CEO compensation of US$3.8m. (This figure is for the year to December 2017). While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$690k. We examined a group of similar sized companies, with market capitalizations of below US$200m. The median CEO total compensation in that group is US$427k.
Thus we can conclude that Patrick Walsh receives more in total compensation than the median of a group of companies in the same market, and of similar size to Town Sports International Holdings, Inc.. However, this doesn't necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.
You can see, below, how CEO compensation at Town Sports International Holdings has changed over time.
Is Town Sports International Holdings, Inc. Growing?
Town Sports International Holdings, Inc. has reduced its earnings per share by an average of 70% a year, over the last three years (measured with a line of best fit). In the last year, its revenue is up 9.9%.
Unfortunately, earnings per share have trended lower over the last three years. And the modest revenue growth over 12 months isn't much comfort against the reduced earnings per share. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. It could be important to check this free visual depiction of what analysts expect for the future.
Has Town Sports International Holdings, Inc. Been A Good Investment?
I think that the total shareholder return of 54%, over three years, would leave most Town Sports International Holdings, Inc. shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.
We examined the amount Town Sports International Holdings, Inc. pays its CEO, and compared it to the amount paid by similar sized companies. Our data suggests that it pays above the median CEO pay within that group.
We think many shareholders would be underwhelmed with the business growth over the last three years.
However, we can't argue with the strong returns to shareholders, over the same time period. So on this analysis we'd stop short of criticizing the level of CEO compensation. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Town Sports International Holdings (free visualization of insider trades).
Important note: Town Sports International Holdings may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
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 email@example.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.