Key Things To Understand About General Dynamics' (NYSE:GD) CEO Pay Cheque

By
Simply Wall St
Published
December 17, 2020

This article will reflect on the compensation paid to Phebe Novakovic who has served as CEO of General Dynamics Corporation (NYSE:GD) since 2013. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for General Dynamics.

Check out 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$44b, and paid its CEO total annual compensation worth US$18m over the year to December 2019. We note that's a decrease of 12% compared to last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.6m.

For comparison, other companies in the industry with market capitalizations above US$8.0b, reported a median total CEO compensation of US$18m. From this we gather that Phebe Novakovic is paid around the median for CEOs in the industry. Moreover, Phebe Novakovic also holds US$113m worth of General Dynamics stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20192018Proportion (2019)
Salary US$1.6m US$1.6m 9%
Other US$17m US$19m 91%
Total CompensationUS$18m US$21m100%

Talking in terms of the industry, salary represented approximately 17% of total compensation out of all the companies we analyzed, while other remuneration made up 83% of the pie. General Dynamics sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

NYSE:GD CEO Compensation December 17th 2020

A Look at General Dynamics Corporation's Growth Numbers

Over the past three years, General Dynamics Corporation has seen its earnings per share (EPS) grow by 5.2% per year. It saw its revenue drop 1.9% over the last year.

We would argue that the lack of revenue growth in the last year is less than ideal, but it is good to see a modest EPS growth at least. In conclusion we can't form a strong opinion about business performance yet; but it's one 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?

Given the total shareholder loss of 17% over three years, many shareholders in General Dynamics Corporation are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

As we noted earlier, General Dynamics pays its CEO in line with similar-sized companies belonging to the same industry. Meanwhile, General Dynamics is suffering from adverse shareholder returns and althoughEPS have grown over the past three years, they have not been extraordinary. Although we wouldn't say CEO compensation is exceptionally high, it isn't very low either. Shareholders might want to see substantial improvements in returns before agreeing that Phebe deserves a raise.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 1 warning sign for General Dynamics that investors should look into moving forward.

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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