Stock Analysis

How Does AeroVironment's (NASDAQ:AVAV) CEO Salary Compare to Peers?

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Wahid Nawabi became the CEO of AeroVironment, Inc. (NASDAQ:AVAV) in 2016, 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 look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for AeroVironment.

View our latest analysis for AeroVironment

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

At the time of writing, our data shows that AeroVironment, Inc. has a market capitalization of US$2.2b, and reported total annual CEO compensation of US$3.1m for the year to April 2020. That's a notable increase of 49% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$607k.

On comparing similar companies from the same industry with market caps ranging from US$1.0b to US$3.2b, we found that the median CEO total compensation was US$4.7m. This suggests that Wahid Nawabi is paid below the industry median. Moreover, Wahid Nawabi also holds US$5.9m worth of AeroVironment stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20202019Proportion (2020)
Salary US$607k US$624k 20%
Other US$2.5m US$1.4m 80%
Total CompensationUS$3.1m US$2.1m100%

On an industry level, around 19% of total compensation represents salary and 81% is other remuneration. There isn't a significant difference between AeroVironment and the broader market, in terms of salary allocation in the overall compensation package. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

NasdaqGS:AVAV CEO Compensation January 8th 2021

A Look at AeroVironment, Inc.'s Growth Numbers

AeroVironment, Inc. has reduced its earnings per share by 7.7% a year over the last three years. It achieved revenue growth of 13% over the last year.

Few shareholders would be pleased to read that EPS have declined. 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. 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?

We think that the total shareholder return of 72%, over three years, would leave most AeroVironment, Inc. 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.

In Summary...

As we touched on above, AeroVironment, Inc. is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. And while EPS growth is in the red, shareholder returns have been great over the last three years, so that's certainly a bright spot! Although we'd like to see positive EPS growth, we'd argue the remuneration is modest, based on our observations.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 2 warning signs for AeroVironment that you should be aware of before investing.

Switching gears from AeroVironment, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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