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John Sarvis became the CEO of AVX Corporation (NYSE:AVX) in 2015. First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does John Sarvis's Compensation Compare With Similar Sized Companies?
According to our data, AVX Corporation has a market capitalization of US$3.1b, and pays its CEO total annual compensation worth US$1.1m. (This figure is for the year to March 2018). While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$485k. We examined companies with market caps from US$2.0b to US$6.4b, and discovered that the median CEO total compensation of that group was US$4.8m.
This would give shareholders a good impression of the company, since most similar size companies have to 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 AVX has changed from year to year.
Is AVX Corporation Growing?
Over the last three years AVX Corporation has shrunk its earnings per share by an average of 12% per year (measured with a line of best fit). In the last year, its revenue is up 24%.
Unfortunately, earnings per share have trended lower over the last three years. 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 earnings per share has gone backwards over three years. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Shareholders might be interested in this free visualization of analyst forecasts.
Has AVX Corporation Been A Good Investment?
I think that the total shareholder return of 63%, over three years, would leave most AVX Corporation 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 looks like AVX Corporation pays its CEO less than similar sized companies.
John Sarvis receives relatively low remuneration compared to similar sized companies. And while the company isn't growing earnings per share, total returns have been pleasing. Although we could see higher EPS growth, we'd argue the remuneration is not an issue, based on these observations. Shareholders may want to check for free if AVX insiders are buying or selling shares.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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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.