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Does Tutor Perini Corporation's (NYSE:TPC) CEO Pay Reflect Performance?

Simply Wall St

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In 2000 Ronald Tutor was appointed CEO of Tutor Perini Corporation (NYSE:TPC). 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. 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.

View our latest analysis for Tutor Perini

How Does Ronald Tutor's Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Tutor Perini Corporation has a market cap of US$722m, and is paying total annual CEO compensation of US$23m. (This number is for the twelve months until December 2018). While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$1.8m. We looked at a group of companies with market capitalizations from US$400m to US$1.6b, and the median CEO total compensation was US$2.7m.

It would therefore appear that Tutor Perini Corporation pays Ronald Tutor more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

The graphic below shows how CEO compensation at Tutor Perini has changed from year to year.

NYSE:TPC CEO Compensation, July 4th 2019
NYSE:TPC CEO Compensation, July 4th 2019

Is Tutor Perini Corporation Growing?

On average over the last three years, Tutor Perini Corporation has grown earnings per share (EPS) by 14% each year (using a line of best fit). It saw its revenue drop -6.1% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. While it would be good to see revenue growth, profits matter more in the end. Shareholders might be interested in this free visualization of analyst forecasts.

Has Tutor Perini Corporation Been A Good Investment?

Since shareholders would have lost about 39% over three years, some Tutor Perini Corporation shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

We compared total CEO remuneration at Tutor Perini Corporation with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of that group.

However we must not forget that the EPS growth has been very strong over three years. Having said that, shareholders may be disappointed with the weak returns over the last three years. One might thus conclude that it would be better if the company waited until growth is reflected in the share price, before increasing CEO compensation. So you may want to check if insiders are buying Tutor Perini shares with their own money (free access).

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.

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.

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. Thank you for reading.