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How Is Alaska Air Group's (NYSE:ALK) CEO Compensated?

Brad Tilden became the CEO of Alaska Air Group, Inc. (NYSE:ALK) in 2012, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Alaska Air Group.

View our latest analysis for Alaska Air Group

Comparing Alaska Air Group, Inc.'s CEO Compensation With the industry

Our data indicates that Alaska Air Group, Inc. has a market capitalization of US$5.1b, and total annual CEO compensation was reported as US$5.5m for the year to December 2019. That's a notable increase of 26% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$584k.

On comparing similar companies from the same industry with market caps ranging from US$4.0b to US$12b, we found that the median CEO total compensation was US$4.5m. This suggests that Alaska Air Group remunerates its CEO largely in line with the industry average. What's more, Brad Tilden holds US$8.2m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component

2019

2018

Proportion (2019)

Salary

US$584k

US$564k

11%

Other

US$4.9m

US$3.8m

89%

Total Compensation

US$5.5m

US$4.4m

100%

On an industry level, roughly 14% of total compensation represents salary and 86% is other remuneration. Alaska Air Group sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

ceo-compensation
ceo-compensation

A Look at Alaska Air Group, Inc.'s Growth Numbers

Over the last three years, Alaska Air Group, Inc. has shrunk its earnings per share by 58% per year. Its revenue is down 21% over the previous year.

Few shareholders would be pleased to read that EPS have declined. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Alaska Air Group, Inc. Been A Good Investment?

Given the total shareholder loss of 43% over three years, many shareholders in Alaska Air Group, Inc. are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

As we touched on above, Alaska Air Group, Inc. is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. In the meantime, the company has reported declining EPS growth and shareholder returns over the last three years. We'd stop short of saying compensation is inappropriate, but we would understand if shareholders had questions regarding a future raise.

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 4 warning signs for Alaska Air Group that investors should think about before committing capital to this stock.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.

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