In 2011 Bill Spence was appointed CEO of PPL Corporation (NYSE:PPL). This analysis aims first to contrast CEO compensation with other large companies. 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. This process should give us an idea about how appropriately the CEO is paid.
How Does Bill Spence's Compensation Compare With Similar Sized Companies?
Our data indicates that PPL Corporation is worth US$24b, and total annual CEO compensation was reported as US$11m for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$1.2m. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. 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).
So Bill Spence receives a similar amount to the median CEO pay, amongst the companies we looked at. This doesn't tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context.
You can see, below, how CEO compensation at PPL has changed over time.
Is PPL Corporation Growing?
On average over the last three years, PPL Corporation has shrunk earnings per share by 5.0% each year (measured with a line of best fit). Revenue was pretty flat on last year.
Sadly for shareholders, earnings per share are actually down, over three years. And the flat revenue is seriously uninspiring. 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 PPL Corporation Been A Good Investment?
With a total shareholder return of 13% over three years, PPL Corporation shareholders would, in general, be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
Bill Spence is paid around what is normal the leaders of larger companies.
We're not seeing great strides in earnings per share, and total returns were decent but not amazing in the last three years. We do not think the CEO pay is a problem, but we'd venture the company should look to improve its business metrics (and share price) before paying any more. Whatever your view on compensation, you might want to check if insiders are buying or selling PPL shares (free trial).
Important note: PPL 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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