Is Itron, Inc.’s (NASDAQ:ITRI) CEO Pay Fair?

Philip Mezey has been the CEO of Itron, Inc. (NASDAQ:ITRI) since 2013. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. 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.

Check out our latest analysis for Itron

How Does Philip Mezey’s Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Itron, Inc. has a market cap of US$2.0b, and is paying total annual CEO compensation of US$5.0m. (This is based on the year to December 2018). That’s below the compensation, last year. We think total compensation is more important but we note that the CEO salary is lower, at US$821k. We examined companies with market caps from US$1.0b to US$3.2b, and discovered that the median CEO total compensation of that group was US$3.7m.

It would therefore appear that Itron, Inc. pays Philip Mezey more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn’t mean the remuneration is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.

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

NasdaqGS:ITRI CEO Compensation, April 22nd 2019
NasdaqGS:ITRI CEO Compensation, April 22nd 2019

Is Itron, Inc. Growing?

Itron, Inc. has reduced its earnings per share by an average of 86% a year, over the last three years (measured with a line of best fit). In the last year, its revenue is up 18%.

Unfortunately, earnings per share have trended lower over the last three years. While the revenue growth is good to see, it is outweighed by the fact that earnings per share are down, over three years. 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 Itron, Inc. Been A Good Investment?

Itron, Inc. has generated a total shareholder return of 21% over three years, so most shareholders would be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary…

We compared the total CEO remuneration paid by Itron, Inc., and compared it to remuneration at a group of similar sized companies. Our data suggests that it pays above the median CEO pay within that group.

Earnings per share have not grown in three years, and the revenue growth fails to impress us.

And while shareholder returns have been respectable, they have hardly been superb. So you may want to delve deeper, because we don’t think the CEO pay is too low. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Itron (free visualization of insider trades).

Important note: Itron may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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. Thank you for reading.