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John Baker has been the CEO of FRP Holdings, Inc. (NASDAQ:FRPH) since 2017, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for FRP Holdings.
How Does Total Compensation For John Baker Compare With Other Companies In The Industry?
At the time of writing, our data shows that FRP Holdings, Inc. has a market capitalization of US$431m, and reported total annual CEO compensation of US$457k for the year to December 2019. That's a notable decrease of 25% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$200k.
On comparing similar companies from the same industry with market caps ranging from US$200m to US$800m, we found that the median CEO total compensation was US$688k. Accordingly, FRP Holdings pays its CEO under the industry median. Furthermore, John Baker directly owns US$65m worth of shares in the company, implying that they are deeply invested in the company's success.
Speaking on an industry level, nearly 29% of total compensation represents salary, while the remainder of 71% is other remuneration. FRP Holdings pays out 44% of remuneration in the form of a salary, significantly higher than the industry average. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
A Look at FRP Holdings, Inc.'s Growth Numbers
Over the last three years, FRP Holdings, Inc. has shrunk its earnings per share by 18% per year. Its revenue is down 14% 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. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has FRP Holdings, Inc. Been A Good Investment?
Since shareholders would have lost about 2.5% over three years, some FRP Holdings, Inc. investors would surely be feeling negative emotions. So shareholders would probably want the company to be lessto generous with CEO compensation.
As we noted earlier, FRP Holdings pays its CEO lower than the norm for similar-sized companies belonging to the same industry. While we are quite underwhelmed with EPS growth, the shareholder returns over the past three years have also failed to impress us. Although we wouldn’t say CEO compensation is high, it’s tough to foresee shareholders warming up to thoughts of a bump anytime soon.
CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 3 warning signs for FRP Holdings (1 is concerning!) that you should be aware of before investing here.
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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