Stock Analysis

Here's Why AeroVironment, Inc.'s (NASDAQ:AVAV) CEO May Not Expect A Pay Rise This Year

  •  Updated
NasdaqGS:AVAV
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Performance at AeroVironment, Inc. (NASDAQ:AVAV) has not been particularly rosy recently and shareholders will likely be holding CEO Wahid Nawabi and the board accountable for this. The next AGM coming up on 24 September 2021 will be a chance for shareholders to have their concerns addressed by the board, challenge management on company strategy and vote on resolutions such as executive remuneration, which may help change the company's future prospects. From our analysis below, we think CEO compensation looks appropriate for now.

See our latest analysis for AeroVironment

Comparing AeroVironment, Inc.'s CEO Compensation With the industry

Our data indicates that AeroVironment, Inc. has a market capitalization of US$2.1b, and total annual CEO compensation was reported as US$2.5m for the year to April 2021. That's a notable decrease of 17% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$632k.

In comparison with other companies in the industry with market capitalizations ranging from US$1.0b to US$3.2b, the reported median CEO total compensation was US$5.2m. This suggests that Wahid Nawabi is paid below the industry median. Moreover, Wahid Nawabi also holds US$2.3m worth of AeroVironment stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20212020Proportion (2021)
Salary US$632k US$607k 25%
Other US$1.9m US$2.5m 75%
Total CompensationUS$2.5m US$3.1m100%

Talking in terms of the industry, salary represented approximately 18% of total compensation out of all the companies we analyzed, while other remuneration made up 82% of the pie. AeroVironment is paying a higher share of its remuneration through a salary in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

ceo-compensation
NasdaqGS:AVAV CEO Compensation September 18th 2021

AeroVironment, Inc.'s Growth

AeroVironment, Inc. has reduced its earnings per share by 34% a year over the last three years. Its revenue is up 11% over the last year.

Few shareholders would be pleased to read that EPS have declined. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for us to put aside my concerns around EPS. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has AeroVironment, Inc. Been A Good Investment?

Given the total shareholder loss of 20% over three years, many shareholders in AeroVironment, Inc. are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 2 warning signs for AeroVironment that investors should think about before committing capital to this stock.

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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