Under the guidance of CEO Bill Brown, L3Harris Technologies, Inc. (NYSE:LHX) has performed reasonably well recently. This is something shareholders will keep in mind as they cast their votes on company resolutions such as executive remuneration in the upcoming AGM on 23 April 2021. Here is our take on why we think the CEO compensation looks appropriate.
How Does Total Compensation For Bill Brown Compare With Other Companies In The Industry?
According to our data, L3Harris Technologies, Inc. has a market capitalization of US$45b, and paid its CEO total annual compensation worth US$15m over the year to January 2021. We note that's a small decrease of 6.3% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.5m.
On comparing similar companies in the industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$18m. So it looks like L3Harris Technologies compensates Bill Brown in line with the median for the industry. Moreover, Bill Brown also holds US$77m worth of L3Harris Technologies stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
On an industry level, around 17% of total compensation represents salary and 83% is other remuneration. It's interesting to note that L3Harris Technologies 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.
A Look at L3Harris Technologies, Inc.'s Growth Numbers
Earnings per share at L3Harris Technologies, Inc. are much the same as they were three years ago, albeit with slightly higher. Its revenue is down 1.3% over the previous year.
We generally like to see a little revenue growth, but the modest improvement in EPS is good. It's hard to reach a conclusion about business performance right now. This may be one to watch. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has L3Harris Technologies, Inc. Been A Good Investment?
L3Harris Technologies, Inc. has served shareholders reasonably well, with a total return of 32% over three years. But they would probably prefer not to see CEO compensation far in excess of the median.
Seeing that the company has put up a decent performance, only a few shareholders, if any at all, might have questions about the CEO pay 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.
CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 2 warning signs for L3Harris Technologies that investors should think about before committing capital to this stock.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.
If you decide to trade L3Harris Technologies, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account.
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.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.