Pedro Pizarro became the CEO of Edison International (NYSE:EIX) in 2016. First, this article will compare CEO compensation with compensation at other large 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.
How Does Pedro Pizarro's Compensation Compare With Similar Sized Companies?
According to our data, Edison International has a market capitalization of US$26b, and pays its CEO total annual compensation worth US$9.8m. (This number is for the twelve months until December 2018). While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$1.2m. We took a group of companies with market capitalizations over US$8.0b, and calculated the median CEO total compensation to be US$11m. Once you start looking at very large companies, you need to take a broader range, because there simply aren't that many of them.
So Pedro Pizarro is paid around the average of the companies we looked at. Although this fact alone doesn't tell us a great deal, it becomes more relevant when considered against the business performance.
You can see, below, how CEO compensation at Edison International has changed over time.
Is Edison International Growing?
On average over the last three years, Edison International has shrunk earnings per share by 73% each year (measured with a line of best fit). Its revenue is up 5.2% over last year.
Unfortunately, earnings per share have trended lower over the last three years. The fairly low revenue growth fails to impress given that the earnings per share is down. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. You might want to check this free visual report on analyst forecasts for future earnings.
Has Edison International Been A Good Investment?
With a total shareholder return of 13% over three years, Edison International shareholders would, in general, be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.
Pedro Pizarro is paid around what is normal the leaders of larger companies.
We feel that earnings per share have been a bit disappointing, but and we don't think the total returns are amazing. We do not think the CEO pay is a problem, but it's probably fair to say that many shareholders would like to see improved performance, before any pay rise occurs. So you may want to check if insiders are buying Edison International shares with their own money (free access).
Important note: Edison International 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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