Ken McBride has been the CEO of Stamps.com Inc. (NASDAQ:STMP) since 2001. 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. 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 Ken McBride's Compensation Compare With Similar Sized Companies?
Our data indicates that Stamps.com Inc. is worth US$1.5b, and total annual CEO compensation was reported as US$2.7m for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$792k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. When we examined a selection of companies with market caps ranging from US$1.0b to US$3.2b, we found the median CEO total compensation was US$3.9m.
Most shareholders would consider it a positive that Ken McBride takes less total compensation than the CEOs of most similar size companies, leaving more for shareholders. Though positive, it's important we delve into the performance of the actual business.
You can see, below, how CEO compensation at Stamps.com has changed over time.
Is Stamps.com Inc. Growing?
Stamps.com Inc. has increased its earnings per share (EPS) by an average of 12% a year, over the last three years (using a line of best fit). It achieved revenue growth of 5.8% over the last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. It's also good to see modest revenue growth, suggesting the underlying business is healthy. You might want to check this free visual report on analyst forecasts for future earnings.
Has Stamps.com Inc. Been A Good Investment?
Since shareholders would have lost about 28% over three years, some Stamps.com Inc. shareholders would surely be feeling negative emotions. So shareholders would probably think the company shouldn't be too generous with CEO compensation.
Stamps.com Inc. is currently paying its CEO below what is normal for companies of its size.
Since the business is growing, many would argue this suggests the pay is modest. Despite some positives, it is likely that shareholders wanted better returns, given the performance over the last three years. So while we would not say that Ken McBride is generously paid, it would be good to see an improvement in business performance before too an increase in pay. When I see fairly low remuneration, combined with earnings per share growth, but without big share price gains, it makes me want to research the potential for future gains. Shareholders may want to check for free if Stamps.com insiders are buying or selling shares.
Important note: Stamps.com may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
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.
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