Stock Analysis

We Think Some Shareholders May Hesitate To Increase American States Water Company's (NYSE:AWR) CEO Compensation

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Performance at American States Water Company (NYSE:AWR) has been reasonably good and CEO Bob Sprowls has done a decent job of steering the company in the right direction. As shareholders go into the upcoming AGM on 18 May 2021, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. However, some shareholders may still be hesitant of being overly generous with CEO compensation.

View our latest analysis for American States Water

How Does Total Compensation For Bob Sprowls Compare With Other Companies In The Industry?

At the time of writing, our data shows that American States Water Company has a market capitalization of US$2.9b, and reported total annual CEO compensation of US$5.9m for the year to December 2020. Notably, that's an increase of 19% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at US$860k.

In comparison with other companies in the industry with market capitalizations ranging from US$2.0b to US$6.4b, the reported median CEO total compensation was US$2.4m. This suggests that Bob Sprowls is paid more than the median for the industry. Moreover, Bob Sprowls also holds US$11m worth of American States Water stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20202019Proportion (2020)
Salary US$860k US$796k 15%
Other US$5.1m US$4.2m 85%
Total CompensationUS$5.9m US$5.0m100%

Speaking on an industry level, nearly 28% of total compensation represents salary, while the remainder of 72% is other remuneration. American States Water pays a modest slice of remuneration through salary, as compared 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.

NYSE:AWR CEO Compensation May 12th 2021

American States Water Company's Growth

Over the past three years, American States Water Company has seen its earnings per share (EPS) grow by 11% per year. It achieved revenue growth of 3.1% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's nice to see revenue heading northwards, as this is consistent with healthy business conditions. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has American States Water Company Been A Good Investment?

Most shareholders would probably be pleased with American States Water Company for providing a total return of 51% 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...

Given that the company's overall performance has been reasonable, the CEO remuneration policy might not be shareholders' central point of focus in the upcoming AGM. However, any decision to raise CEO pay might be met with some objections from the shareholders given that the CEO is already paid higher than the industry average.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 1 warning sign for American States Water that you should be aware of before investing.

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