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Should You Worry About Emmis Communications Corporation's (NASDAQ:EMMS) CEO Pay Cheque?

Simply Wall St

In 1981 Jeff Smulyan was appointed CEO of Emmis Communications Corporation (NASDAQ:EMMS). 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. The aim of all this is to consider the appropriateness of CEO pay levels.

Check out our latest analysis for Emmis Communications

How Does Jeff Smulyan's Compensation Compare With Similar Sized Companies?

According to our data, Emmis Communications Corporation has a market capitalization of US$65m, and pays its CEO total annual compensation worth US$2.6m. (This number is for the twelve months until February 2019). That's a notable increase of 137% on last year. We think total compensation is more important but we note that the CEO salary is lower, at US$1.0m. We took a group of companies with market capitalizations below US$200m, and calculated the median CEO total compensation to be US$489k.

Thus we can conclude that Jeff Smulyan receives more in total compensation than the median of a group of companies in the same market, and of similar size to Emmis Communications Corporation. However, this doesn't necessarily mean the pay is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.

The graphic below shows how CEO compensation at Emmis Communications has changed from year to year.

NasdaqGS:EMMS CEO Compensation, August 15th 2019

Is Emmis Communications Corporation Growing?

Emmis Communications Corporation has increased its earnings per share (EPS) by an average of 28% a year, over the last three years (using a line of best fit). In the last year, its revenue is down -16%.

This demonstrates that the company has been improving recently. A good result. While it would be good to see revenue growth, profits matter more in the end. We don't have analyst forecasts, but shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Emmis Communications Corporation Been A Good Investment?

Emmis Communications Corporation has served shareholders reasonably well, with a total return of 23% over three years. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

In Summary...

We compared the total CEO remuneration paid by Emmis Communications Corporation, and compared it to remuneration at a group of similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.

However, the earnings per share growth over three years is certainly impressive. We also think investors are doing ok, over the same time period. So, considering the EPS growth we do not wish to criticize the level of CEO compensation, though we'd recommend further research on management. Whatever your view on compensation, you might want to check if insiders are buying or selling Emmis Communications shares (free trial).

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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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. Thank you for reading.