In 2015 Dan McCarthy was appointed CEO of Frontier Communications Corporation (NASDAQ:FTR). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we'll consider growth that the business demonstrates. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Dan McCarthy's Compensation Compare With Similar Sized Companies?
Our data indicates that Frontier Communications Corporation is worth US$71m, and total annual CEO compensation is US$7.1m. (This number is for the twelve months until December 2018). While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$1.0m. We looked at a group of companies with market capitalizations under US$200m, and the median CEO total compensation was US$489k.
As you can see, Dan McCarthy is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Frontier Communications Corporation is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance.
You can see a visual representation of the CEO compensation at Frontier Communications, below.
Is Frontier Communications Corporation Growing?
Frontier Communications Corporation has reduced its earnings per share by an average of 48% a year, over the last three years (measured with a line of best fit). It saw its revenue drop -4.7% over the last year.
Sadly for shareholders, earnings per share are actually down, over three years. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Shareholders might be interested in this free visualization of analyst forecasts.
Has Frontier Communications Corporation Been A Good Investment?
With a three year total loss of 99%, Frontier Communications Corporation would certainly have some dissatisfied shareholders. So shareholders would probably think the company shouldn't be too generous with CEO compensation.
We examined the amount Frontier Communications 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.
We think many shareholders would be underwhelmed with the business growth over the last three years.
Over the same period, investors would have come away with nothing in the way of share price gains. This analysis suggests to us that the CEO is paid too generously! Shareholders may want to check for free if Frontier Communications insiders are buying or selling shares.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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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.