In 2015 Chris Franklin was appointed CEO of Aqua America, Inc. (NYSE:WTR). First, this article will compare CEO compensation with compensation at other large companies. Next, we'll consider growth that the business demonstrates. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Chris Franklin's Compensation Compare With Similar Sized Companies?
Our data indicates that Aqua America, Inc. is worth US$9.8b, and total annual CEO compensation was reported as US$3.6m for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$749k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. When we examined a group of companies with market caps over US$8.0b, we found that their median CEO total compensation was US$11m. (We took a wide range because the CEOs of massive companies tend to be paid similar amounts - even though some are quite a bit bigger than others).
This would give shareholders a good impression of the company, since most large companies pay more, leaving less for shareholders. Though positive, it's important we delve into the performance of the actual business.
The graphic below shows how CEO compensation at Aqua America has changed from year to year.
Is Aqua America, Inc. Growing?
Over the last three years Aqua America, Inc. has shrunk its earnings per share by an average of 8.0% per year (measured with a line of best fit). Its revenue is up 3.3% 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. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. It could be important to check this free visual depiction of what analysts expect for the future.
Has Aqua America, Inc. Been A Good Investment?
I think that the total shareholder return of 64%, over three years, would leave most Aqua America, Inc. shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.
It appears that Aqua America, Inc. remunerates its CEO below most large companies.
It's well worth noting that while Chris Franklin is paid less than most company leaders (at larger companies), there isn't much EPS growth. Having said that, returns to shareholders have been great. We would like to see EPS growth, but in our view it seems the CEO is remunerated reasonably. Shareholders may want to check for free if Aqua America insiders are buying or selling shares.
If you want to buy a stock that is better than Aqua America, this free list of high return, low debt companies is a great place to look.
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