Dan Poneman became the CEO of Centrus Energy Corp. (NYSEMKT:LEU) in 2015. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. 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 method should give us information to assess how appropriately the company pays the CEO.
How Does Dan Poneman's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Centrus Energy Corp. has a market cap of US$64m, and reported total annual CEO compensation of US$2.2m for the year to December 2019. That's below the compensation, last year. We think total compensation is more important but we note that the CEO salary is lower, at US$750k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. We looked at a group of companies with market capitalizations under US$200m, and the median CEO total compensation was US$601k.
Next, let's break down remuneration compositions to understand how the industry and company compare with each other. Speaking on an industry level, we can see that nearly 19% of total compensation represents salary, while the remainder of 81% is other remuneration. According to our research, Centrus Energy has allocated a higher percentage of pay to salary in comparison to the broader sector.
As you can see, Dan Poneman is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Centrus Energy Corp. is paying too much. We can get a better idea of how generous the pay is by looking at the performance of the underlying business. You can see, below, how CEO compensation at Centrus Energy has changed over time.
Is Centrus Energy Corp. Growing?
Over the last three years Centrus Energy Corp. has shrunk its earnings per share by an average of 15% per year (measured with a line of best fit). It achieved revenue growth of 8.7% over the last year.
Unfortunately, earnings per share have trended lower over the last three years. And the modest revenue growth over 12 months isn't much comfort against the reduced earnings per share. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has Centrus Energy Corp. Been A Good Investment?
Boasting a total shareholder return of 55% over three years, Centrus Energy Corp. 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.
We examined the amount Centrus Energy Corp. pays its CEO, and compared it to the amount paid by similar sized companies. Our data suggests that it pays above the median CEO pay within that group.
Earnings per share have not grown in three years, and the revenue growth fails to impress us. However, we can't argue with the strong returns to shareholders, over the same time period. Given this situation we doubt shareholders are particularly concerned about the CEO compensation. Moving away from CEO compensation for the moment, we've identified 3 warning signs for Centrus Energy that you should be aware of before investing.
Important note: Centrus Energy 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 firstname.lastname@example.org. 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.
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