Tim Boyle became the CEO of Columbia Sportswear Company (NASDAQ:COLM) in 1988, 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 evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Comparing Columbia Sportswear Company's CEO Compensation With the industry
According to our data, Columbia Sportswear Company has a market capitalization of US$5.4b, and paid its CEO total annual compensation worth US$2.7m over the year to December 2019. Notably, that's a decrease of 19% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$955k.
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$6.7m. Accordingly, Columbia Sportswear pays its CEO under the industry median. Furthermore, Tim Boyle directly owns US$2.0b worth of shares in the company, implying that they are deeply invested in the company's success.
Speaking on an industry level, nearly 31% of total compensation represents salary, while the remainder of 69% is other remuneration. Columbia Sportswear pays out 36% of remuneration in the form of a salary, significantly higher than the industry average. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
A Look at Columbia Sportswear Company's Growth Numbers
Earnings per share at Columbia Sportswear Company are much the same as they were three years ago, albeit slightly lower. Its revenue is down 5.1% over the previous year.
The lack of EPS growth is certainly unimpressive. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Columbia Sportswear Company Been A Good Investment?
Most shareholders would probably be pleased with Columbia Sportswear Company for providing a total return of 50% over three years. 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.
As previously discussed, Tim is compensated less than what is normal for CEOs of companies of similar size, and which belong to the same industry. And while EPS growth is in the red, shareholder returns have been great over the last three years, so that's certainly a bright spot! So, while it would be nice to have better EPS growth, our analysis suggests CEO compensation is quite modest.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 2 warning signs for Columbia Sportswear that investors should look into moving forward.
Important note: Columbia Sportswear is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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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