Bill Brown has been the CEO of L3Harris Technologies, Inc. (NYSE:LHX) since 2011. First, this article will compare CEO compensation with compensation at other large companies. After that, we will consider the growth in the business. 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.
How Does Bill Brown's Compensation Compare With Similar Sized Companies?
Our data indicates that L3Harris Technologies, Inc. is worth US$49b, and total annual CEO compensation was reported as US$16m for the year to June 2019. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$1.3m. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We looked at a group of companies with market capitalizations over US$8.0b and the median CEO total compensation was US$11m. Once you start looking at very large companies, you need to take a broader range, because there simply aren't that many of them.
Thus we can conclude that Bill Brown receives more in total compensation than the median of a group of large companies in the same market as L3Harris Technologies, Inc.. However, this doesn't necessarily mean the pay is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
You can see, below, how CEO compensation at L3Harris Technologies has changed over time.
Is L3Harris Technologies, Inc. Growing?
L3Harris Technologies, Inc. has increased its earnings per share (EPS) by an average of 20% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 54%.
This shows that the company has improved itself over the last few years. Good news for shareholders. The combination of strong revenue growth with medium-term earnings per share improvement certainly points to the kind of growth I like to see. You might want to check this free visual report on analyst forecasts for future earnings.
Has L3Harris Technologies, Inc. Been A Good Investment?
I think that the total shareholder return of 128%, over three years, would leave most L3Harris Technologies, Inc. shareholders smiling. 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.
We examined the amount L3Harris Technologies, Inc. pays its CEO, and compared it to the amount paid by other large companies. As discussed above, we discovered that the company pays more than the median of that group.
However we must not forget that the EPS growth has been very strong over three years. In addition, shareholders have done well over the same time period. So, considering this good performance, the CEO compensation may be quite appropriate. Shareholders may want to check for free if L3Harris Technologies insiders are buying or selling shares.
Important note: L3Harris Technologies may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.
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