Does Northrop Grumman Corporation’s (NYSE:NOC) CEO Pay Reflect Performance?

Wes Bush became the CEO of Northrop Grumman Corporation (NYSE:NOC) in 2010. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. Next, we’ll consider growth that the business demonstrates. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.

View our latest analysis for Northrop Grumman

How Does Wes Bush’s Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Northrop Grumman Corporation has a market cap of US$54.3b, and is paying total annual CEO compensation of US$19m. That’s actually a decrease on the year before. We took a group of companies with market capitalizations over US$8.0b, and calculated the median CEO compensation to be US$11m.

Thus we can conclude that Wes Bush receives more in total compensation than the median of a group of large companies in the same market as Northrop Grumman Corporation. However, this doesn’t necessarily mean the pay is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.

You can see, below, how CEO compensation at Northrop Grumman has changed over time.

NYSE:NOC CEO Compensation October 17th 18
NYSE:NOC CEO Compensation October 17th 18

Is Northrop Grumman Corporation Growing?

Over the last three years Northrop Grumman Corporation has grown its earnings per share (EPS) by an average of 7.7% per year. In the last year, its revenue is up 5.3%.

I’m not particularly impressed by the revenue growth, but I’m happy with the modest EPS growth. Considering these factors I’d say performance has been pretty decent, though not amazing.

You might want to check this free visual report on analyst forecasts for future earnings.

Has Northrop Grumman Corporation Been A Good Investment?

Most shareholders would probably be pleased with Northrop Grumman Corporation for providing a total return of 87% over three years. This strong performance might mean some shareholders don’t mind if the CEO is paid more than is normal for a company of its size.

In Summary…

We compared total CEO remuneration at Northrop Grumman Corporation with the amount paid at other large companies. As discussed above, we discovered that the company pays more than the median of that group.

Over the last three years returns to investors have been great, though we might have liked stronger business growth. So, considering these tasty returns, the CEO compensation may be quite appropriate. Whatever your view on compensation, you might want to check if insiders are buying or selling Northrop Grumman Corporation shares (free trial).

Or you might rather take a peek at this analytical visualization of historic cash flow, earnings and revenue.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.