In 2009 Robert Sprowls was appointed CEO of American States Water Company (NYSE:AWR). 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. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Robert Sprowls’s Compensation Compare With Similar Sized Companies?
According to our data, American States Water Company has a market capitalization of US$2.4b, and paid its CEO total annual compensation worth US$3.0m over the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$772k. 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 examined companies with market caps from US$2.0b to US$6.4b, and discovered that the median CEO total compensation of that group was US$5.6m.
Most shareholders would consider it a positive that Robert Sprowls 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.
You can see a visual representation of the CEO compensation at American States Water, below.
Is American States Water Company Growing?
Over the last three years American States Water Company has grown its earnings per share (EPS) by an average of 8.0% per year (using a line of best fit). It achieved revenue growth of 8.5% over the last year.
I’d prefer higher revenue growth, but I’m happy with the modest EPS growth. So there are some positives here, but not enough to earn high praise. You might want to check this free visual report on analyst forecasts for future earnings.
Has American States Water Company Been A Good Investment?
I think that the total shareholder return of 57%, over three years, would leave most American States Water Company shareholders smiling. 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.
American States Water Company is currently paying its CEO below what is normal for companies of its size.
Robert Sprowls is paid less than what is normal at similar size companies, and the total shareholder return has been pleasing over the last three years. Although we could see higher growth, we’d argue the remuneration is modest, based on these observations. On another note, we’ve spotted 2 warning signs for American States Water 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.
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