We Think Shareholders Are Less Likely To Approve A Large Pay Rise For AAR Corp.'s (NYSE:AIR) CEO For Now

Key Insights

• AAR to hold its Annual General Meeting on 19th of September
• CEO John Holmes' total compensation includes salary of US$1.00m
• Total compensation is 45% above industry average
• AAR's total shareholder return over the past three years was 204% while its EPS grew by 54% over the past three years

Under the guidance of CEO John Holmes, AAR Corp. (NYSE:AIR) has performed reasonably well recently. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 19th of September. However, some shareholders will still be cautious of paying the CEO excessively.

View our latest analysis for AAR

How Does Total Compensation For John Holmes Compare With Other Companies In The Industry?

According to our data, AAR Corp. has a market capitalization of US$2.0b, and paid its CEO total annual compensation worth US$6.7m over the year to May 2023. Notably, that's a decrease of 46% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.0m.

On examining similar-sized companies in the American Aerospace & Defense industry with market capitalizations between US$1.0b and US$3.2b, we discovered that the median CEO total compensation of that group was US$4.6m. This suggests that John Holmes is paid more than the median for the industry. Furthermore, John Holmes directly owns US$19m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	US$1.0m	US$925k	15%
Other	US$5.7m	US$11m	85%
Total Compensation	US$6.7m	US$12m	100%

Speaking on an industry level, nearly 21% of total compensation represents salary, while the remainder of 79% is other remuneration. It's interesting to note that AAR allocates a smaller portion of compensation to salary in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

AAR Corp.'s Growth

AAR Corp.'s earnings per share (EPS) grew 54% per year over the last three years. Its revenue is up 9.4% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has AAR Corp. Been A Good Investment?

Most shareholders would probably be pleased with AAR Corp. for providing a total return of 204% 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...

The company's decent performance might have made most shareholders happy, possibly making CEO remuneration the least of the concerns to be discussed in the upcoming AGM. However, any decision to raise CEO pay might be met with some objections from the shareholders given that the CEO is already paid higher than the industry average.

If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at AAR.

Important note: AAR 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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.