Here's Why Some Shareholders May Not Be Too Generous With General Dynamics Corporation's (NYSE:GD) CEO Compensation This Year

By
Simply Wall St
Published
April 28, 2021
NYSE:GD

Under the guidance of CEO Phebe Novakovic, General Dynamics Corporation (NYSE:GD) 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 05 May 2021. We present our case of why we think CEO compensation looks fair.

See our latest analysis for General Dynamics

How Does Total Compensation For Phebe Novakovic Compare With Other Companies In The Industry?

According to our data, General Dynamics Corporation has a market capitalization of US$53b, and paid its CEO total annual compensation worth US$19m over the year to December 2020. That's just a smallish increase of 5.5% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.6m.

In comparison with other companies in the industry with market capitalizations over US$8.0b , the reported median total CEO compensation was US$18m. From this we gather that Phebe Novakovic is paid around the median for CEOs in the industry. What's more, Phebe Novakovic holds US$139m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component20202019Proportion (2020)
Salary US$1.6m US$1.6m 8%
Other US$18m US$17m 92%
Total CompensationUS$19m US$18m100%

Speaking on an industry level, nearly 17% of total compensation represents salary, while the remainder of 83% is other remuneration. It's interesting to note that General Dynamics allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

ceo-compensation
NYSE:GD CEO Compensation April 28th 2021

General Dynamics Corporation's Growth

General Dynamics Corporation's earnings per share (EPS) grew 4.3% per year over the last three years. It saw its revenue drop 3.6% over the last year.

We would argue that the lack of revenue growth in the last year is less than ideal, but the modest improvement in EPS is good. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has General Dynamics Corporation Been A Good Investment?

General Dynamics Corporation has not done too badly by shareholders, with a total return of 1.6%, over three years. It would be nice to see that metric improve in the future. As a result, investors in the company might be reluctant about agreeing to increase CEO pay in the future, before seeing an improvement on their returns.

To Conclude...

Given that the company's overall performance has been reasonable, the CEO remuneration policy might not be shareholders' central point of focus in the upcoming AGM. However, we still think that any proposed increase in CEO compensation will be examined closely to make sure the compensation is appropriate and linked to performance.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 1 warning sign for General Dynamics that investors should be aware of in a dynamic business environment.

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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