How Should Investors Feel About Build-A-Bear Workshop, Inc.'s (NYSE:BBW) CEO Pay?

Simply Wall St
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Sharon John became the CEO of Build-A-Bear Workshop, Inc. (NYSE:BBW) in 2013. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we'll look at a snap shot of the business growth. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.

See our latest analysis for Build-A-Bear Workshop

How Does Sharon John's Compensation Compare With Similar Sized Companies?

According to our data, Build-A-Bear Workshop, Inc. has a market capitalization of US$45m, and paid its CEO total annual compensation worth US$2.2m over the year to February 2019. We think total compensation is more important but we note that the CEO salary is lower, at US$712k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. 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$496k.

It would therefore appear that Build-A-Bear Workshop, Inc. pays Sharon John 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.

You can see, below, how CEO compensation at Build-A-Bear Workshop has changed over time.

NYSE:BBW CEO Compensation, September 20th 2019
NYSE:BBW CEO Compensation, September 20th 2019

Is Build-A-Bear Workshop, Inc. Growing?

Over the last three years Build-A-Bear Workshop, Inc. has shrunk its earnings per share by an average of 108% per year (measured with a line of best fit). In the last year, its revenue is down 6.9%.

Sadly for shareholders, earnings per share are actually down, over three years. And the impression is worse when you consider revenue is down year-on-year. 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 Build-A-Bear Workshop, Inc. Been A Good Investment?

Given the total loss of 71% over three years, many shareholders in Build-A-Bear Workshop, Inc. are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

We examined the amount Build-A-Bear Workshop, Inc. pays its CEO, and compared it to the amount paid by similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.

Earnings per share have not grown in three years, and the revenue growth fails to impress us. Just as bad, share price gains for investors have failed to materialize, over the same period. This analysis suggests to us that the CEO is paid too generously! If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Build-A-Bear Workshop.

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.

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.

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