Jim Torgerson became the CEO of Avangrid, Inc. (NYSE:AGR) in 2015. First, this article will compare CEO compensation with compensation at other large companies. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Jim Torgerson's Compensation Compare With Similar Sized Companies?
At the time of writing our data says that Avangrid, Inc. has a market cap of US$15b, and is paying total annual CEO compensation of US$5.7m. (This is based on the year to December 2018). We think total compensation is more important but we note that the CEO salary is lower, at US$1.1m. 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. There aren't very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.
A first glance this seems like a real positive for shareholders, since Jim Torgerson is paid less than the average total compensation paid by other large companies. However, before we heap on the praise, we should delve deeper to understand business performance.
You can see, below, how CEO compensation at Avangrid has changed over time.
Is Avangrid, Inc. Growing?
On average over the last three years, Avangrid, Inc. has shrunk earnings per share by 5.3% each year (measured with a line of best fit). In the last year, its revenue is up 5.1%.
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. Shareholders might be interested in this free visualization of analyst forecasts.
Has Avangrid, Inc. Been A Good Investment?
Avangrid, Inc. has generated a total shareholder return of 27% over three years, so most shareholders would be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.
It appears that Avangrid, Inc. remunerates its CEO below most large companies.
Shareholders should note that compensation for Jim Torgerson is under the median of a group of large companies. But the business isn't growing earnings per share, and the returns to shareholders haven't been wonderful. So while shareholders shouldn't be overly concerned about CEO compensation, we suspect most would prefer see improved performance, before increasing pay. Shareholders may want to check for free if Avangrid insiders are buying or selling shares.
Important note: Avangrid 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.
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If you spot an error that warrants correction, please contact the editor at email@example.com. 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.