In 2014 Roger Krone was appointed CEO of Leidos Holdings, Inc. (NYSE:LDOS). First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Roger Krone’s Compensation Compare With Similar Sized Companies?
According to our data, Leidos Holdings, Inc. has a market capitalization of US$9.6b, and pays its CEO total annual compensation worth US$9.8m. (This figure is for the year to December 2018). That’s a fairly small increase of 6.7% on year before. While we always look at total compensation first, we note that the salary component is less, at US$1.1m. We looked at a group of companies with market capitalizations from US$4.0b to US$12b, and the median CEO total compensation was US$6.6m.
As you can see, Roger Krone is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Leidos Holdings, Inc. is paying too much. 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 Leidos Holdings has changed over time.
Is Leidos Holdings, Inc. Growing?
Over the last three years Leidos Holdings, Inc. has shrunk its earnings per share by an average of 8.7% per year (measured with a line of best fit). The trailing twelve months of revenue was pretty much the same as the prior period.
Unfortunately, earnings per share have trended lower over the last three years. And the flat revenue hardly impresses. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Shareholders might be interested in this free visualization of analyst forecasts.
Has Leidos Holdings, Inc. Been A Good Investment?
Most shareholders would probably be pleased with Leidos Holdings, Inc. for providing a total return of 91% over three years. 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 compared total CEO remuneration at Leidos Holdings, Inc. with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of that group.We think many shareholders would be underwhelmed with the business growth over the last three years.
On the other hand, returns have been good, so the company is doing something right. Considering this, shareholders are probably not too worried about the CEO compensation. Whatever your view on compensation, you might want to check if insiders are buying or selling Leidos Holdings shares (free trial).
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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