In 2015 Sachin Lawande was appointed CEO of Visteon Corporation (NASDAQ:VC). First, this article will compare CEO compensation with compensation at similar sized 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. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Sachin Lawande's Compensation Compare With Similar Sized Companies?
According to our data, Visteon Corporation has a market capitalization of US$1.9b, and pays its CEO total annual compensation worth US$7.9m. (This figure is for the year to December 2018). While we always look at total compensation first, we note that the salary component is less, at US$1.0m. We examined companies with market caps from US$1.0b to US$3.2b, and discovered that the median CEO total compensation of that group was US$4.1m.
As you can see, Sachin Lawande is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Visteon Corporation is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance.
The graphic below shows how CEO compensation at Visteon has changed from year to year.
Is Visteon Corporation Growing?
On average over the last three years, Visteon Corporation has grown earnings per share (EPS) by 25% each year (using a line of best fit). In the last year, its revenue is down -8.0%.
This shows that the company has improved itself over the last few years. Good news for shareholders. Revenue growth is a real positive for growth, but ultimately profits are more important. You might want to check this free visual report on analyst forecasts for future earnings.
Has Visteon Corporation Been A Good Investment?
With a three year total loss of 4.3%, Visteon Corporation would certainly have some dissatisfied shareholders. So shareholders would probably think the company shouldn't be too generous with CEO compensation.
We examined the amount Visteon Corporation pays its CEO, and compared it to the amount paid by similar sized companies. We found that it pays well over the median amount paid in the benchmark group.
Importantly, though, the company has impressed with its earnings per share growth, over three years. However, the returns to investors are far less impressive, over the same period. While EPS is positive, we'd say shareholders would want better returns before the CEO is paid much more. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Visteon (free visualization of insider trades).
Important note: Visteon 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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