Is AeroVironment, Inc.’s (NASDAQ:AVAV) CEO Pay Fair?

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Wahid Nawabi became the CEO of AeroVironment, Inc. (NASDAQ:AVAV) in 2016. First, this article will compare CEO compensation with compensation at similar sized companies. Then we’ll look at a snap shot of the business growth. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.

View our latest analysis for AeroVironment

How Does Wahid Nawabi’s Compensation Compare With Similar Sized Companies?

Our data indicates that AeroVironment, Inc. is worth US$1.3b, and total annual CEO compensation is US$1.7m. (This is based on the year to April 2018). We think total compensation is more important but we note that the CEO salary is lower, at US$535k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$1.0b to US$3.2b. The median total CEO compensation was US$3.9m.

This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. Though positive, it’s important we delve into the performance of the actual business.

You can see, below, how CEO compensation at AeroVironment has changed over time.

NasdaqGS:AVAV CEO Compensation, July 5th 2019
NasdaqGS:AVAV CEO Compensation, July 5th 2019

Is AeroVironment, Inc. Growing?

AeroVironment, Inc. has increased its earnings per share (EPS) by an average of 64% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 17%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It’s a real positive to see this sort of growth in a single year. That suggests a healthy and growing business.

Has AeroVironment, Inc. Been A Good Investment?

Most shareholders would probably be pleased with AeroVironment, Inc. for providing a total return of 105% over three years. 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…

AeroVironment, Inc. is currently paying its CEO below what is normal for companies of its size. Considering the underlying business is growing earnings, this would suggest the pay is modest. The strong history of shareholder returns might even have some thinking that Wahid Nawabi deserves a raise!

Most shareholders like to see a modestly paid CEO combined with strong performance by the company. But it is even better if company insiders are also buying shares with their own money. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling AeroVironment (free visualization of insider trades).

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.