Ronald Tutor became the CEO of Tutor Perini Corporation (NYSE:TPC) in 2000, and we think it’s a good time to look at the executive’s compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Check out our latest analysis for Tutor Perini
How Does Total Compensation For Ronald Tutor Compare With Other Companies In The Industry?
According to our data, Tutor Perini Corporation has a market capitalization of US$648m, and paid its CEO total annual compensation worth US$7.2m over the year to December 2019. Notably, that’s a decrease of 69% over the year before. While this analysis focuses on total compensation, it’s worth acknowledging that the salary portion is lower, valued at US$1.8m.
For comparison, other companies in the same industry with market capitalizations ranging between US$400m and US$1.6b had a median total CEO compensation of US$2.3m. This suggests that Ronald Tutor is paid more than the median for the industry. Furthermore, Ronald Tutor directly owns US$102m worth of shares in the company, implying that they are deeply invested in the company’s success.
| Component | 2019 | 2018 | Proportion (2019) |
| Salary | US$1.8m | US$1.8m | 24% |
| Other | US$5.5m | US$22m | 76% |
| Total Compensation | US$7.2m | US$23m | 100% |
On an industry level, roughly 21% of total compensation represents salary and 79% is other remuneration. Tutor Perini is paying a higher share of its remuneration through a salary in comparison to the overall industry. If non-salary compensation dominates total pay, it’s an indicator that the executive’s salary is tied to company performance.
Tutor Perini Corporation’s Growth
Over the last three years, Tutor Perini Corporation has shrunk its earnings per share by 94% per year. It achieved revenue growth of 11% over the last year.
Overall this is not a very positive result for shareholders. There’s no doubt that the silver lining is that revenue is up. But it isn’t sufficiently fast growth to overlook the fact that EPS has gone backwards over three years. These factors suggest that the business performance wouldn’t really justify a high pay packet for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Tutor Perini Corporation Been A Good Investment?
Since shareholders would have lost about 53% over three years, some Tutor Perini Corporation investors would surely be feeling negative emotions. So shareholders would probably want the company to be lessto generous with CEO compensation.
In Summary…
As we touched on above, Tutor Perini Corporation is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Disappointingly, share price gains over the last three years have failed to materialize. To make matters worse, EPS growth has also been negative during this period. Understandably, the company’s shareholders might have some questions about the CEO’s remuneration, given the disappointing performance.
CEO compensation is an important area to keep your eyes on, but we’ve also need to pay attention to other attributes of the company. We identified 2 warning signs for Tutor Perini (1 is concerning!) that you should be aware of before investing here.
Important note: Tutor Perini is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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