In 1989 Norm Asbjornson was appointed CEO of AAON, Inc. (NASDAQ:AAON). First, this article will compare CEO compensation with compensation at similar sized 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.
How Does Norm Asbjornson’s Compensation Compare With Similar Sized Companies?
Our data indicates that AAON, Inc. is worth US$2.4b, and total annual CEO compensation is US$1.9m. (This figure is for the year to December 2018). While we always look at total compensation first, we note that the salary component is less, at US$481k. We examined companies with market caps from US$1.0b to US$3.2b, and discovered that the median CEO total compensation of that group was US$4.1m.
Most shareholders would consider it a positive that Norm Asbjornson takes less total compensation than the CEOs of most similar size companies, leaving more for shareholders. However, before we heap on the praise, we should delve deeper to understand business performance.
The graphic below shows how CEO compensation at AAON has changed from year to year.
Is AAON, Inc. Growing?
Over the last three years AAON, Inc. has shrunk its earnings per share by an average of 4.2% per year (measured with a line of best fit). Its revenue is up 7.5% over last year.
Unfortunately, earnings per share have trended lower over the last three years. And the modest revenue growth over 12 months isn’t much comfort against the reduced earnings per share. It’s hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration.
Has AAON, Inc. Been A Good Investment?
Boasting a total shareholder return of 69% over three years, AAON, Inc. has done well by shareholders. 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.
It looks like AAON, Inc. pays its CEO less than similar sized companies.
Norm Asbjornson receives relatively low remuneration compared to similar sized companies. And while the company isn’t growing earnings per share, total returns have been pleasing. So, while it would be nice to have EPS growth, on our analysis the CEO compensation is not an issue. Shareholders may want to check for free if AAON insiders are buying or selling shares.
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