Does Lockheed Martin Corporation's (NYSE:LMT) CEO Pay Compare Well With Peers?

October 08, 2019

Marillyn Hewson became the CEO of Lockheed Martin Corporation (NYSE:LMT) in 2013. First, this article will compare CEO compensation with compensation at other large companies. Next, we'll consider growth that the business demonstrates. 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.

See our latest analysis for Lockheed Martin

How Does Marillyn Hewson's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Lockheed Martin Corporation has a market cap of US$108b, and reported total annual CEO compensation of US$22m for the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$1.8m. 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 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.

Thus we can conclude that Marillyn Hewson receives more in total compensation than the median of a group of large companies in the same market as Lockheed Martin Corporation. 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.

The graphic below shows how CEO compensation at Lockheed Martin has changed from year to year.

NYSE:LMT CEO Compensation, October 9th 2019

Is Lockheed Martin Corporation Growing?

Lockheed Martin Corporation has increased its earnings per share (EPS) by an average of 17% a year, over the last three years (using a line of best fit). Its revenue is up 12% over last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. Shareholders might be interested in this free visualization of analyst forecasts.

Has Lockheed Martin Corporation Been A Good Investment?

Most shareholders would probably be pleased with Lockheed Martin Corporation for providing a total return of 78% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary...

We compared the total CEO remuneration paid by Lockheed Martin Corporation, and compared it to remuneration at a group of other large companies. As discussed above, we discovered that the company pays more than the median of that group.

Importantly, though, the company has impressed with its earnings per share growth, over three years. In addition, shareholders have done well over the same time period. Considering this fine result for shareholders, we daresay the CEO compensation might be apt. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Lockheed Martin.

Important note: Lockheed Martin 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.

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About NYSE:LMT

Lockheed Martin

An aerospace and defense company, engages in the research, design, development, manufacture, integration, and sustainment of technology systems, products, and services in the United States, Europe, Asia, the Middle East, and internationally.

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