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Chuck Jones has been the CEO of FirstEnergy Corp. (NYSE:FE) since 2015, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
How Does Total Compensation For Chuck Jones Compare With Other Companies In The Industry?
Our data indicates that FirstEnergy Corp. has a market capitalization of US$23b, and total annual CEO compensation was reported as US$15m for the year to December 2019. That's a notable increase of 32% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.1m.
On comparing similar companies in the industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$14m. So it looks like FirstEnergy compensates Chuck Jones in line with the median for the industry. What's more, Chuck Jones holds US$26m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
On an industry level, around 14% of total compensation represents salary and 86% is other remuneration. In FirstEnergy's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
FirstEnergy Corp.'s Growth
Over the past three years, FirstEnergy Corp. has seen its earnings per share (EPS) grow by 127% per year. In the last year, its revenue is down 3.7%.
This demonstrates that the company has been improving recently and is good news for the shareholders. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has FirstEnergy Corp. Been A Good Investment?
Boasting a total shareholder return of 49% over three years, FirstEnergy Corp. has done well by shareholders. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
As we touched on above, FirstEnergy Corp. is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. The company is growing earnings per share and total shareholder returns have been pleasing. Indeed, many might consider that Chuck is compensated rather modestly, given the solid company performance! Also, such solid returns might lead to shareholders warming to the idea of a bump in pay.
We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 3 warning signs for FirstEnergy (1 makes us a bit uncomfortable!) that you should be aware of before investing here.
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.
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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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