Yahoo Finance Should You Worry About BAE Systems plc's (LON:BA.) CEO Pay Cheque?
Charles Woodburn has been the CEO of BAE Systems plc (LON:BA.) since 2017. First, this article will compare CEO compensation with compensation at other large companies. 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. This process should give us an idea about how appropriately the CEO is paid.
See our latest analysis for BAE Systems
How Does Charles Woodburn's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that BAE Systems plc has a market cap of UK£17b, and reported total annual CEO compensation of UK£3.9m for the year to December 2019. We note that's an increase of 63% above last year. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at UK£920k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. We took a group of companies with market capitalizations over UK£6.4b, and calculated the median CEO total compensation to be UK£4.3m. There aren't very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.
Next, let's break down remuneration compositions to understand how the industry and company compare with each other. Talking in terms of the sector, salary represented approximately 42% of total compensation out of all the companies we analysed, while other remuneration made up 58% of the pie. Non-salary compensation represents a greater slice of the remuneration pie for BAE Systems, in sharp contrast to the overall sector.
So Charles Woodburn 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 a visual representation of the CEO compensation at BAE Systems, below.
Is BAE Systems plc Growing?
Over the last three years BAE Systems plc has seen earnings per share (EPS) move in a positive direction by an average of 16% per year (using a line of best fit). It achieved revenue growth of 8.8% over the last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. It's nice to see a little revenue growth, as this is consistent with healthy business conditions. It could be important to check this free visual depiction of what analysts expect for the future.
Has BAE Systems plc Been A Good Investment?
Given the total loss of 6.5% over three years, many shareholders in BAE Systems plc are probably rather dissatisfied, to say the least. So shareholders would probably think the company shouldn't be too generous with CEO compensation.
In Summary...
Charles Woodburn is paid around what is normal for the leaders of larger companies.
We'd say the company can boast of its EPS growth, but we find the returns over the last three years to be lacking. Considering the the positives we don't think the CEO pays is too high, but it's certainly hard to argue it is too low. On another note, we've spotted 1 warning sign for BAE Systems that investors should look into moving forward.
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.
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.
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. Thank you for reading.
