Jennifer Sherman became the CEO of Federal Signal Corporation (NYSE:FSS) in 2016. First, this article will compare CEO compensation with compensation at similar sized companies. 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 process should give us an idea about how appropriately the CEO is paid.
How Does Jennifer Sherman’s Compensation Compare With Similar Sized Companies?
Our data indicates that Federal Signal Corporation is worth US$1.2b, and total annual CEO compensation is US$3.4m. (This is based on the year to 2017). We think total compensation is more important but we note that the CEO salary is lower, at US$666k. We looked at a group of companies with market capitalizations from US$400m to US$1.6b, and the median CEO compensation was US$2.3m.
As you can see, Jennifer Sherman is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Federal Signal 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.
The graphic below shows how CEO compensation at Federal Signal has changed from year to year.
Is Federal Signal Corporation Growing?
Over the last three years Federal Signal Corporation has grown its earnings per share (EPS) by an average of 11% per year (using a line of best fit). Its revenue is up 28% over last year.
This demonstrates that the company has been improving recently. A good result. It’s great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly.
Shareholders might be interested in this free visualization of analyst forecasts. .
Has Federal Signal Corporation Been A Good Investment?
Most shareholders would probably be pleased with Federal Signal Corporation for providing a total return of 58% over three years. 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.
We examined the amount Federal Signal Corporation 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.
However we must not forget that the EPS growth has been very strong over three years. In addition, shareholders have done well over the same time period. So, considering this good performance, the CEO compensation may be quite appropriate. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Federal Signal (free visualization of insider trades).
Or you might prefer gaze upon this detailed graph of past earnings, revenue and cash flow .
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.