In 2011 Bill Spence was appointed CEO of PPL Corporation (NYSE:PPL). This analysis aims first to contrast CEO compensation with other large companies. After that, we will consider the growth in the business. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.
How Does Bill Spence’s Compensation Compare With Similar Sized Companies?
According to our data, PPL Corporation has a market capitalization of US$21b, and pays its CEO total annual compensation worth US$11m. (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$1.2m. 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.
So Bill Spence receives a similar amount to the median CEO pay, amongst the companies we looked at. While this data point isn’t particularly informative alone, it gains more meaning when considered with business performance.
You can see a visual representation of the CEO compensation at PPL, below.
Is PPL Corporation Growing?
Over the last three years PPL Corporation has shrunk its earnings per share by an average of 5.0% per year (measured with a line of best fit). The trailing twelve months of revenue was pretty much the same as the prior period.
Sadly for shareholders, earnings per share are actually down, over three years. And the flat revenue is seriously uninspiring. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO.
Has PPL Corporation Been A Good Investment?
Given the total loss of 1.9% over three years, many shareholders in PPL Corporation are probably rather dissatisfied, to say the least. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.
Remuneration for Bill Spence is close enough to the median pay for a CEO of a large company .
Returns have been disappointing and the company is not growing its earnings per share. Few would argue that it’s wise for the company to pay any more, before returns improve. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at PPL.
Important note: PPL 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.
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