Todd Nelson became the CEO of Career Education Corporation (NASDAQ:CECO) in 2015. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we'll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Todd Nelson's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Career Education Corporation has a market cap of US$1.3b, and reported total annual CEO compensation of US$7.2m for the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$770k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$1.0b to US$3.2b. The median total CEO compensation was US$4.0m.
Thus we can conclude that Todd Nelson receives more in total compensation than the median of a group of companies in the same market, and of similar size to Career Education Corporation. However, this doesn't necessarily mean the pay is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
The graphic below shows how CEO compensation at Career Education has changed from year to year.
Is Career Education Corporation Growing?
Over the last three years Career Education Corporation has grown its earnings per share (EPS) by an average of 16% per year (using a line of best fit). It achieved revenue growth of 6.2% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's nice to see a little revenue growth, as this is consistent with healthy business conditions. Shareholders might be interested in this free visualization of analyst forecasts.
Has Career Education Corporation Been A Good Investment?
I think that the total shareholder return of 88%, over three years, would leave most Career Education Corporation shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
We compared the total CEO remuneration paid by Career Education Corporation, and compared it to remuneration at a group of similar sized companies. We found that it pays well over the median amount paid in the benchmark group.
However we must not forget that the EPS growth has been very strong over three years. Even better, returns to shareholders have been plentiful, over the same time period. Considering this fine result for shareholders, we daresay the CEO compensation might be apt. Shareholders may want to check for free if Career Education insiders are buying or selling shares.
Important note: Career Education 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.
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