Is American Water Works Company, Inc. (NYSE:AWK) Excessively Paying Its CEO?

In 2014 Susan Story was appointed CEO of American Water Works Company, Inc. (NYSE:AWK). 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. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.

Check out 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$23b, and is paying total annual CEO compensation of US$5.0m. (This is based on the year to December 2018). We think total compensation is more important but we note that the CEO salary is lower, at US$944k. We looked at a group of companies with market capitalizations over US$8.0b and the median CEO total compensation was US$11m. Once you start looking at very large companies, you need to take a broader range, because there simply aren't that many of them.

A first glance this seems like a real positive for shareholders, since Susan Story is paid less than the average total compensation paid by other large companies. Though positive, it's important we delve into the performance of the actual business.

The graphic below shows how CEO compensation at American Water Works Company has changed from year to year.

Is American Water Works Company, Inc. Growing?

American Water Works Company, Inc. has increased its earnings per share (EPS) by an average of 5.2% a year, over the last three years (using a line of best fit). It achieved revenue growth of 4.5% over the last year.

I'd prefer higher revenue growth, but it is good to see modest EPS growth. So there are some positives here, but not enough to earn high praise.

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 85% 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 appears that American Water Works Company, Inc. remunerates its CEO below most large companies.

Susan Story receives relatively low remuneration compared to other large companies. And the returns to shareholders were great, over the last few 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.