How Should Investors React To American Water Works Company, Inc.’s (NYSE:AWK) CEO Pay?

Susan Story has been the CEO of American Water Works Company, Inc. (NYSE:AWK) since 2014. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. 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.

See our latest analysis for American Water Works Company

How Does Susan Story’s Compensation Compare With Similar Sized Companies?

At the time of writing our data says that American Water Works Company, Inc. has a market cap of US$19b, and is paying total annual CEO compensation of US$4.4m. (This is based on the year to December 2017). We think total compensation is more important but we note that the CEO salary is lower, at US$921k. We took a group of companies with market capitalizations over US$8.0b, and calculated the median CEO total compensation to be US$11m. (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).

This would give shareholders a good impression of the company, since most large companies pay more, leaving less 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, below, how CEO compensation at American Water Works Company has changed over time.

NYSE:AWK CEO Compensation, April 3rd 2019
NYSE:AWK CEO Compensation, April 3rd 2019

Is American Water Works Company, Inc. Growing?

American Water Works Company, Inc. saw earnings per share stay pretty flat over the last three years, albeit with a slight positive trend. In the last year, its revenue is up 2.5%.

I’m not particularly impressed by the revenue growth, but the modest improvement in EPS is good. Considering these factors I’d say performance has been pretty decent, though not amazing. You might want to check this free visual report on analyst forecasts for future earnings.

Has American Water Works Company, Inc. Been A Good Investment?

Most shareholders would probably be pleased with American Water Works Company, Inc. for providing a total return of 59% 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…

American Water Works Company, Inc. is currently paying its CEO below what is normal for large companies.

It’s well worth noting that while Susan Story is paid below what is normal at large companies, the returns have been very pleasing, over the last three years. So, while it might be nice to have better EPS growth, on our analysis the CEO compensation is quite modest. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at American Water Works Company.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.