Karl McDonnell became the CEO of Strategic Education, Inc. (NASDAQ:STRA) in 2013. 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. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Karl McDonnell's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Strategic Education, Inc. has a market cap of US$2.6b, and reported total annual CEO compensation of US$4.6m for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$702k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$2.0b to US$6.4b. The median total CEO compensation was US$5.1m.
So Karl McDonnell receives a similar amount to the median CEO pay, amongst the companies we looked at. While this data point isn't particularly informative alone, it gains more meaning when considered with business performance.
The graphic below shows how CEO compensation at Strategic Education has changed from year to year.
Is Strategic Education, Inc. Growing?
Strategic Education, Inc. has reduced its earnings per share by an average of 77% a year, over the last three years (measured with a line of best fit). Its revenue is up 95% over last year.
Investors should note that, over three years, earnings per share are down. But in contrast the revenue growth is strong, suggesting future potential for earnings growth. It's hard to reach a conclusion about business performance right now. This may be one to watch. It could be important to check this free visual depiction of what analysts expect for the future.
Has Strategic Education, Inc. Been A Good Investment?
I think that the total shareholder return of 123%, over three years, would leave most Strategic Education, 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.
Karl McDonnell is paid around the same as most CEOs of similar size companies.
While we would like to see improved growth metrics, there is no doubt that the total returns have been great, over the last three years. So we can conclude that on this analysis the CEO compensation seems pretty sound. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Strategic Education.
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.
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