We Think Leidos Holdings, Inc.'s (NYSE:LDOS) CEO Compensation Looks Fair

By
Simply Wall St
Published
September 27, 2021
NYSE:LDOS
Source: Shutterstock

We have been pretty impressed with the performance at Leidos Holdings, Inc. (NYSE:LDOS) recently and CEO Roger Krone deserves a mention for their role in it. The pleasing results would be something shareholders would keep in mind at the upcoming AGM on 03 October 2021. This would also be a chance for them to hear the board review the financial results, discuss future company strategy and vote on any resolutions such as executive remuneration. In light of the great performance, we discuss the case why we think CEO compensation is not excessive.

See our latest analysis for Leidos Holdings

How Does Total Compensation For Roger Krone Compare With Other Companies In The Industry?

At the time of writing, our data shows that Leidos Holdings, Inc. has a market capitalization of US$13b, and reported total annual CEO compensation of US$12m for the year to January 2021. We note that's an increase of 15% above last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.2m.

In comparison with other companies in the industry with market capitalizations over US$8.0b , the reported median total CEO compensation was US$13m. This suggests that Leidos Holdings remunerates its CEO largely in line with the industry average. Moreover, Roger Krone also holds US$30m worth of Leidos Holdings stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20212020Proportion (2021)
Salary US$1.2m US$1.2m 10%
Other US$11m US$9.5m 90%
Total CompensationUS$12m US$11m100%

On an industry level, roughly 23% of total compensation represents salary and 77% is other remuneration. In Leidos Holdings' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

ceo-compensation
NYSE:LDOS CEO Compensation September 27th 2021

Leidos Holdings, Inc.'s Growth

Leidos Holdings, Inc.'s earnings per share (EPS) grew 21% per year over the last three years. In the last year, its revenue is up 14%.

This demonstrates that the company has been improving recently and is good news for the shareholders. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Leidos Holdings, Inc. Been A Good Investment?

Boasting a total shareholder return of 44% over three years, Leidos Holdings, Inc. has done well by shareholders. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

To Conclude...

Given the company's decent performance, the CEO remuneration policy might not be shareholders' central point of focus in the AGM. In fact, strategic decisions that could impact the future of the business might be a far more interesting topic for investors as it would help them set their longer-term expectations.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We identified 2 warning signs for Leidos Holdings (1 shouldn't be ignored!) that you should be aware of before investing here.

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.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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Simply Wall St

Simply Wall St is focused on providing unbiased, high-quality research coverage on every listed company in the world. Our research team consists of data scientists and multiple equity analysts with over two decades worth of financial markets experience between them.