Our View On Edison International's (NYSE:EIX) CEO Pay

This article will reflect on the compensation paid to Pedro Pizarro who has served as CEO of Edison International (NYSE:EIX) since 2016. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Edison International.

See our latest analysis for Edison International

Comparing Edison International's CEO Compensation With the industry

Our data indicates that Edison International has a market capitalization of US$24b, and total annual CEO compensation was reported as US$12m for the year to December 2019. We note that's an increase of 20% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.2m.

In comparison with other companies in the industry with market capitalizations over US$8.0b , the reported median total CEO compensation was US$13m. This suggests that Edison International remunerates its CEO largely in line with the industry average. Moreover, Pedro Pizarro also holds US$3.9m worth of Edison International stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

On an industry level, around 13% of total compensation represents salary and 87% is other remuneration. It's interesting to note that Edison International allocates a smaller portion of compensation to salary in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

Edison International's Growth

Edison International has reduced its earnings per share by 40% a year over the last three years. Its revenue is up 8.1% over the last year.

The decline in EPS is a bit concerning. The fairly low revenue growth fails to impress given that the EPS is down. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Edison International Been A Good Investment?

With a total shareholder return of 9.8% over three years, Edison International has done okay by shareholders. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

In Summary...

As we noted earlier, Edison International pays its CEO in line with similar-sized companies belonging to the same industry. According to our analysis, Edison International is suffering from uninspiring EPS growth, and even though shareholder returns are stable, they are hardly impressive. These figures do not go well against CEO compensation, which is more or less equal to the industry median. We would stop short of the compensation is inappropriate, but we can't say the executive is underpaid.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 4 warning signs for Edison International you should be aware of, and 1 of them doesn't sit too well with us.

Important note: Edison International is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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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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