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Is Covanta Holding Corporation's (NYSE:CVA) CEO Overpaid Relative To Its Peers?

Simply Wall St

In 2015 Steve Jones was appointed CEO of Covanta Holding Corporation (NYSE:CVA). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we'll consider growth that the business demonstrates. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.

Check out our latest analysis for Covanta Holding

How Does Steve Jones's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Covanta Holding Corporation has a market cap of US$1.9b, and reported total annual CEO compensation of US$4.6m for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$800k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$1.0b to US$3.2b. The median total CEO compensation was US$3.9m.

So Steve Jones is paid around the average of the companies we looked at. While this data point isn't particularly informative alone, it gains more meaning when considered with business performance.

You can see a visual representation of the CEO compensation at Covanta Holding, below.

NYSE:CVA CEO Compensation, December 11th 2019
NYSE:CVA CEO Compensation, December 11th 2019

Is Covanta Holding Corporation Growing?

On average over the last three years, Covanta Holding Corporation has grown earnings per share (EPS) by 18% each year (using a line of best fit). It achieved revenue growth of 1.2% over the last year.

This demonstrates that the company has been improving recently. A good result. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. You might want to check this free visual report on analyst forecasts for future earnings.

Has Covanta Holding Corporation Been A Good Investment?

Covanta Holding Corporation has generated a total shareholder return of 17% over three years, so most shareholders would be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

In Summary...

Steve Jones is paid around the same as most CEOs of similar size companies.

Shareholder returns could be better but shareholders would be pleased with the positive EPS growth. So upon reflection one could argue that the CEO pay is quite reasonable. So you may want to check if insiders are buying Covanta Holding shares with their own money (free access).

Important note: Covanta Holding 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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.