Does Booz Allen Hamilton Holding Corporation's (NYSE:BAH) CEO Pay Matter?

In 2015 Horacio Rozanski was appointed CEO of Booz Allen Hamilton Holding Corporation (NYSE:BAH). This analysis aims first to contrast CEO compensation with other large companies. Next, we'll consider growth that the business demonstrates. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.

See our latest analysis for Booz Allen Hamilton Holding

How Does Horacio Rozanski's Compensation Compare With Similar Sized Companies?

Our data indicates that Booz Allen Hamilton Holding Corporation is worth US$10b, and total annual CEO compensation was reported as US$7.4m for the year to March 2019. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$1.5m. Importantly, there may be performance hurdles relating to the non-salary component 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$12m. (We took a wide range because the CEOs of massive companies tend to be paid similar amounts - even though some are quite a bit bigger than others).

Pay mix tells us a lot about how a company functions versus the wider industry, and it's no different in the case of Booz Allen Hamilton Holding. On an industry level, roughly 16% of total compensation represents salary and 84% is other remuneration. Our data reveals that Booz Allen Hamilton Holding allocates salary in line with the wider market.

Most shareholders would consider it a positive that Horacio Rozanski takes less in total compensation than the CEOs of most other large companies, leaving more for shareholders. While this is a good thing, you'll need to understand the business better before you can form an opinion. You can see a visual representation of the CEO compensation at Booz Allen Hamilton Holding, below.

Is Booz Allen Hamilton Holding Corporation Growing?

On average over the last three years, Booz Allen Hamilton Holding Corporation has seen earnings per share (EPS) move in a favourable direction by 25% each year (using a line of best fit). In the last year, its revenue is up 11%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. You might want to check this free visual report on analyst forecasts for future earnings.

Has Booz Allen Hamilton Holding Corporation Been A Good Investment?

Most shareholders would probably be pleased with Booz Allen Hamilton Holding Corporation for providing a total return of 120% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

It looks like Booz Allen Hamilton Holding Corporation pays its CEO less than the average at large companies.

Many would consider this to indicate that the pay is modest since the business is growing. The pleasing shareholder returns are the cherry on top; you might even consider that Horacio Rozanski deserves a raise! Most shareholders like to see a modestly paid CEO combined with strong performance by the company. But it is even better if company insiders are also buying shares with their own money. Shifting gears from CEO pay for a second, we've picked out 1 warning sign for Booz Allen Hamilton Holding that investors should be aware of in a dynamic business environment.

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 spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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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