Is Spirit AeroSystems Holdings, Inc.’s (NYSE:SPR) CEO Salary Justified?

Simply Wall St - finance.yahoo.com Posted 5 years ago
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Tom Gentile became the CEO of Spirit AeroSystems Holdings, Inc. (NYSE:SPR) in 2016. This analysis aims first to contrast CEO compensation with other large companies. Then we’ll look at a snap shot of the business growth. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.

Check out our latest analysis for Spirit AeroSystems Holdings

How Does Tom Gentile’s Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Spirit AeroSystems Holdings, Inc. has a market cap of US$10b, and is paying total annual CEO compensation of US$9.9m. (This figure is for the year to December 2017). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$1.1m. When we examined a group of companies with market caps over US$8.0b, we found that their median CEO compensation was US$11m. There aren’t very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.

So Tom Gentile receives a similar amount to the median CEO pay, amongst the companies we looked at. Although this fact alone doesn’t tell us a great deal, it becomes more relevant when considered against the business performance.

The graphic below shows how CEO compensation at Spirit AeroSystems Holdings has changed from year to year.

NYSE:SPR CEO Compensation, March 1st 2019
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Is Spirit AeroSystems Holdings, Inc. Growing?

Over the last three years Spirit AeroSystems Holdings, Inc. has shrunk its earnings per share by an average of 4.4% per year (measured with a line of best fit). Its revenue is up 3.4% over last year.

Few shareholders would be pleased to read that earnings per share are lower over three years. And the modest revenue growth over 12 months isn’t much comfort against the reduced earnings per share. These factors suggest that the business performance wouldn’t really justify a high pay packet for the CEO. It could be important to check this free visual depiction of what analysts expect for the future.

Has Spirit AeroSystems Holdings, Inc. Been A Good Investment?

I think that the total shareholder return of 113%, over three years, would leave most Spirit AeroSystems Holdings, Inc. shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary…

Tom Gentile is paid around the same as most CEOs of large companies.

We feel that earnings per share have been a bit disappointing, but it’s nice to see positive shareholder returns over the last three years. So we doubt many are complaining about the fairly normal CEO pay. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Spirit AeroSystems Holdings (free visualization of insider trades).

Important note: Spirit AeroSystems Holdings may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.

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 [email protected]. 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.