AECOM's (NYSE:ACM) CEO Compensation Looks Acceptable To Us And Here's Why
Key Insights
AECOM to hold its Annual General Meeting on 19th of March
CEO W. Rudd's total compensation includes salary of US$1.25m
Total compensation is similar to the industry average
Over the past three years, AECOM's EPS fell by 14% and over the past three years, the total shareholder return was 53%
The share price of AECOM (NYSE:ACM) has increased significantly over the past few years. However, the earnings growth has not kept up with the share price momentum, suggesting that some other factors may be driving the price direction. The upcoming AGM on 19th of March may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.
View our latest analysis for AECOM
Comparing AECOM's CEO Compensation With The Industry
At the time of writing, our data shows that AECOM has a market capitalization of US$12b, and reported total annual CEO compensation of US$11m for the year to September 2023. Notably, that's an increase of 21% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.3m.
On comparing similar companies in the American Construction industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$10m. From this we gather that W. Rudd is paid around the median for CEOs in the industry. What's more, W. Rudd holds US$20m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Component | 2023 | 2022 | Proportion (2023) |
Salary | US$1.3m | US$1.2m | 11% |
Other | US$10m | US$8.3m | 89% |
Total Compensation | US$11m | US$9.5m | 100% |
On an industry level, around 22% of total compensation represents salary and 78% is other remuneration. It's interesting to note that AECOM 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.
A Look at AECOM's Growth Numbers
Over the last three years, AECOM has shrunk its earnings per share by 14% per year. It achieved revenue growth of 12% over the last year.
Overall this is not a very positive result for shareholders. There's no doubt that the silver lining is that revenue is up. But it isn't sufficiently fast growth to overlook the fact that EPS has gone backwards over three years. 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 AECOM Been A Good Investment?
We think that the total shareholder return of 53%, over three years, would leave most AECOM shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
In Summary...
Although shareholders would be quite happy with the returns they have earned on their initial investment, earnings have failed to grow and this could mean returns may be hard to keep up. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.
CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 3 warning signs for AECOM that investors should think about before committing capital to this stock.
Important note: AECOM 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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
