Stephen Kramer became the CEO of Bright Horizons Family Solutions Inc. (NYSE:BFAM) in 2018, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Bright Horizons Family Solutions.
Comparing Bright Horizons Family Solutions Inc.'s CEO Compensation With the industry
At the time of writing, our data shows that Bright Horizons Family Solutions Inc. has a market capitalization of US$7.5b, and reported total annual CEO compensation of US$1.9m for the year to December 2019. We note that's a decrease of 44% compared to last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$421k.
On examining similar-sized companies in the industry with market capitalizations between US$4.0b and US$12b, we discovered that the median CEO total compensation of that group was US$1.9m. From this we gather that Stephen Kramer is paid around the median for CEOs in the industry. What's more, Stephen Kramer holds US$12m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Speaking on an industry level, nearly 18% of total compensation represents salary, while the remainder of 82% is other remuneration. Bright Horizons Family Solutions is paying a higher share of its remuneration through a salary in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
Bright Horizons Family Solutions Inc.'s Growth
Bright Horizons Family Solutions Inc. has seen its earnings per share (EPS) increase by 2.1% a year over the past three years. It saw its revenue drop 7.5% over the last year.
We would prefer it if there was revenue growth, but the modest EPS growth gives us some relief. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has Bright Horizons Family Solutions Inc. Been A Good Investment?
Boasting a total shareholder return of 56% over three years, Bright Horizons Family Solutions Inc. has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
As we noted earlier, Bright Horizons Family Solutions pays its CEO in line with similar-sized companies belonging to the same industry. But the business isn't reporting great numbers in terms of earnings growth. On the other hand, shareholder returns over the same period have been very healthy. We would like to see EPS growth from the business, although we wouldn't say the CEO compensation is high.
CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 3 warning signs for Bright Horizons Family Solutions you should be aware of, and 1 of them is concerning.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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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