Is L.B. Foster Company’s (NASDAQ:FSTR) CEO Pay Justified?

Bob Bauer became the CEO of L.B. Foster Company (NASDAQ:FSTR) in 2012. First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.

See our latest analysis for L.B. Foster

How Does Bob Bauer’s Compensation Compare With Similar Sized Companies?

Our data indicates that L.B. Foster Company is worth US$184m, and total annual CEO compensation is US$1.9m. (This figure is for the year to December 2017). We think total compensation is more important but we note that the CEO salary is lower, at US$613k. We looked at a group of companies with market capitalizations from US$100m to US$400m, and the median CEO compensation was US$964k.

Thus we can conclude that Bob Bauer receives more in total compensation than the median of a group of companies in the same market, and of similar size to L.B. Foster Company. 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.

You can see a visual representation of the CEO compensation at L.B. Foster, below.

Is L.B. Foster Company Growing?

L.B. Foster Company has increased its earnings per share (EPS) by an average of 54% a year, over the last three years (using a line of best fit). Its revenue is up 20% over last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. It’s a real positive to see this sort of growth in a single year. That suggests a healthy and growing business. It could be important to check this free visual depiction of what analysts expect for the future.

Has L.B. Foster Company Been A Good Investment?

L.B. Foster Company has generated a total shareholder return of 10.0% over three years, so most shareholders wouldn’t be too disappointed. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary…

We compared the total CEO remuneration paid by L.B. Foster Company, 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. Looking at the same time period, we think that the shareholder returns are respectable. You might wish to research management further, but on this analysis, considering the EPS growth, we wouldn’t call the CEO pay problematic. So you may want to check if insiders are buying L.B. Foster shares with their own money (free access).

Important note: L.B. Foster 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.

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.