In 2011 Mike Petters was appointed CEO of Huntington Ingalls Industries, Inc. (NYSE:HII). 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 Mike Petters’s Compensation Compare With Similar Sized Companies?
According to our data, Huntington Ingalls Industries, Inc. has a market capitalization of US$8.9b, and paid its CEO total annual compensation worth US$5.6m over the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$1.0. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We examined companies with market caps from US$4.0b to US$12b, and discovered that the median CEO total compensation of that group was US$6.8m.
So Mike Petters is paid around the average of the companies we looked at. While this data point isn’t particularly informative alone, it gains more meaning when considered with business performance.
The graphic below shows how CEO compensation at Huntington Ingalls Industries has changed from year to year.
Is Huntington Ingalls Industries, Inc. Growing?
Huntington Ingalls Industries, Inc. has increased its earnings per share (EPS) by an average of 21% a year, over the last three years (using a line of best fit). It achieved revenue growth of 10% over the last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. It’s also good to see decent revenue growth in the last year, suggesting the business is healthy and growing.
Has Huntington Ingalls Industries, Inc. Been A Good Investment?
I think that the total shareholder return of 39%, over three years, would leave most Huntington Ingalls Industries, Inc. shareholders smiling. This strong performance might mean some shareholders don’t mind if the CEO were to be paid more than is normal for a company of its size.
Mike Petters is paid around what is normal the leaders of comparable size companies.
Shareholders would surely be happy to see that shareholder returns have been great, and the earnings per share are up. Indeed, many might consider the pay rather modest, given the solid company performance! Whatever your view on compensation, you might want to check if insiders are buying or selling Huntington Ingalls Industries 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.
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