In 2014 Susan Story was appointed CEO of American Water Works Company, Inc. (NYSE:AWK). First, this article will compare CEO compensation with compensation at other large companies. Then we'll look at a snap shot of the business growth. 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 Susan Story's Compensation Compare With Similar Sized Companies?
According to our data, American Water Works Company, Inc. has a market capitalization of US$22b, and paid its CEO total annual compensation worth US$5.0m over the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$944k. 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. Once you start looking at very large companies, you need to take a broader range, because there simply aren't that many of them.
Most shareholders would consider it a positive that Susan Story takes less in total compensation than the CEOs of most other large companies, leaving more for shareholders. Though positive, it's important we delve into the performance of the actual business.
You can see a visual representation of the CEO compensation at American Water Works Company, below.
Is American Water Works Company, Inc. Growing?
On average over the last three years, American Water Works Company, Inc. has grown earnings per share (EPS) by 5.2% each year (using a line of best fit). In the last year, its revenue is up 4.5%.
I'm not particularly impressed by the revenue growth, but I'm happy with the modest EPS growth. It's clear the performance has been quite decent, but it it falls short of outstanding,based on this information. It could be important to check this free visual depiction of what analysts expect for the future.
Has American Water Works Company, Inc. Been A Good Investment?
Boasting a total shareholder return of 77% over three years, American Water Works Company, Inc. has done well by shareholders. 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 American Water Works Company, Inc. remunerates its CEO below most large companies.
Susan Story is paid less than what is normal at large companies, and the total shareholder return has been pleasing over the last three years. We would like to see EPS growth, but in our view it seems the CEO is modestly remunerated. Whatever your view on compensation, you might want to check if insiders are buying or selling American Water Works Company shares (free trial).
If you want to buy a stock that is better than American Water Works Company, this free list of high return, low debt companies is a great place to look.
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