Stock Analysis

Here's Why HEICO Corporation's (NYSE:HEI) CEO May Have Their Pay Bumped Up

NYSE:HEI
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Key Insights

  • HEICO will host its Annual General Meeting on 17th of March
  • CEO Laurans Mendelson's total compensation includes salary of US$1.27m
  • The overall pay is 45% below the industry average
  • HEICO's EPS declined by 1.8% over the past three years while total shareholder return over the past three years was 100%

Shareholders will probably not be disappointed by the robust results at HEICO Corporation (NYSE:HEI) recently and they will be keeping this in mind as they go into the AGM on 17th of March. They will probably be more interested in hearing the board discuss future initiatives to further improve the business as they vote on resolutions such as executive remuneration. We have prepared some analysis below and we show why we think CEO compensation looks decent with even the possibility for a raise.

Check out our latest analysis for HEICO

How Does Total Compensation For Laurans Mendelson Compare With Other Companies In The Industry?

According to our data, HEICO Corporation has a market capitalization of US$20b, and paid its CEO total annual compensation worth US$9.1m over the year to October 2022. That is, the compensation was roughly the same as last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.3m.

On comparing similar companies in the American Aerospace & Defense industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$16m. That is to say, Laurans Mendelson is paid under the industry median. Moreover, Laurans Mendelson also holds US$667m worth of HEICO stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20222021Proportion (2022)
SalaryUS$1.3mUS$1.1m14%
OtherUS$7.8mUS$7.9m86%
Total CompensationUS$9.1m US$9.0m100%

Speaking on an industry level, nearly 18% of total compensation represents salary, while the remainder of 82% is other remuneration. It's interesting to note that HEICO 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:HEI CEO Compensation March 11th 2023

HEICO Corporation's Growth

Over the last three years, HEICO Corporation has shrunk its earnings per share by 1.8% per year. It achieved revenue growth of 21% over the last year.

Investors would be a bit wary of companies that have lower EPS On the other hand, the strong revenue growth suggests the business is growing. 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. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has HEICO Corporation Been A Good Investment?

Most shareholders would probably be pleased with HEICO Corporation for providing a total return of 100% over three years. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

Overall, the company hasn't done too poorly performance-wise, but we would like to see some improvement. Assuming the business continues to grow at a good clip, few shareholders would raise any objections to the CEO's remuneration. Rather, investors would more likely want to engage on discussions related to key strategic initiatives and future growth opportunities for the company and set their longer-term expectations.

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 1 warning sign for HEICO that you should be aware of before investing.

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.

Valuation is complex, but we're here to simplify it.

Discover if HEICO might be undervalued or overvalued with our detailed analysis, featuring fair value estimates, potential risks, dividends, insider trades, and its financial condition.

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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.