How Does Alaska Air Group's (NYSE:ALK) CEO Pay Compare With Company Performance?

By
Simply Wall St
Published
October 22, 2020
NYSE:ALK

Brad Tilden has been the CEO of Alaska Air Group, Inc. (NYSE:ALK) since 2012, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Alaska Air Group.

View our latest analysis for Alaska Air Group

How Does Total Compensation For Brad Tilden Compare With Other Companies In The Industry?

Our data indicates that Alaska Air Group, Inc. has a market capitalization of US$4.9b, and total annual CEO compensation was reported as US$5.5m for the year to December 2019. Notably, that's an increase of 26% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at US$584k.

In comparison with other companies in the industry with market capitalizations ranging from US$4.0b to US$12b, the reported median CEO total compensation was US$3.4m. Hence, we can conclude that Brad Tilden is remunerated higher than the industry median. Furthermore, Brad Tilden directly owns US$7.9m worth of shares in the company, implying that they are deeply invested in the company's success.

Component20192018Proportion (2019)
Salary US$584k US$564k 11%
Other US$4.9m US$3.8m 89%
Total CompensationUS$5.5m US$4.4m100%

Talking in terms of the industry, salary represented approximately 15% of total compensation out of all the companies we analyzed, while other remuneration made up 85% of the pie. It's interesting to note that Alaska Air Group allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

ceo-compensation
NYSE:ALK CEO Compensation October 22nd 2020

A Look at Alaska Air Group, Inc.'s Growth Numbers

Over the last three years, Alaska Air Group, Inc. has shrunk its earnings per share by 58% per year. Its revenue is down 21% over the previous year.

Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Alaska Air Group, Inc. Been A Good Investment?

With a three year total loss of 39% for the shareholders, Alaska Air Group, Inc. would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be lessto generous with CEO compensation.

In Summary...

As we touched on above, Alaska Air Group, Inc. is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. This doesn't look good against shareholder returns, which have been negative for the past three years. What's equally worrying is that the company isn't growing by our analysis. Overall, with such poor performance, shareholder's would probably have questions if the company decided to give the CEO a raise.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We've identified 4 warning signs for Alaska Air Group that investors should be aware of in a dynamic business environment.

Switching gears from Alaska Air Group, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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. 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.
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