Why Auckland International Airport's (NZSE:AIA) CEO Pay Matters

Adrian Littlewood has been the CEO of Auckland International Airport Limited (NZSE:AIA) since 2012, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether Auckland International Airport pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

View our latest analysis for Auckland International Airport

Comparing Auckland International Airport Limited's CEO Compensation With the industry

At the time of writing, our data shows that Auckland International Airport Limited has a market capitalization of NZ$11b, and reported total annual CEO compensation of NZ$2.3m for the year to June 2020. That is, the compensation was roughly the same as last year. Notably, the salary which is NZ$1.24m, represents most of the total compensation being paid.

For comparison, other companies in the same industry with market capitalizations ranging between NZ$5.6b and NZ$17b had a median total CEO compensation of NZ$2.6m. From this we gather that Adrian Littlewood is paid around the median for CEOs in the industry. Furthermore, Adrian Littlewood directly owns NZ$1.6m worth of shares in the company.

On an industry level, roughly 52% of total compensation represents salary and 48% is other remuneration. Auckland International Airport is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Auckland International Airport Limited's Growth Numbers

Over the last three years, Auckland International Airport Limited has shrunk its earnings per share by 18% per year. In the last year, its revenue is down 24%.

The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation 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 Auckland International Airport Limited Been A Good Investment?

With a total shareholder return of 21% over three years, Auckland International Airport Limited shareholders would, in general, be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

In Summary...

As we touched on above, Auckland International Airport Limited is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. According to our analysis, Auckland International Airport is suffering from uninspiring EPS growth, and even though shareholder returns are stable, they are hardly impressive. These figures do not go well against CEO compensation, which is more or less equal to the industry median. Considering all of this, we can't say the CEO is underpaid, and moving forward shareholders will likely want to see higher growth to justify any raise.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 2 warning signs for Auckland International Airport that investors should look into moving forward.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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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