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Is Harley-Davidson, Inc. (NYSE:HOG) Overpaying Its CEO?

Simply Wall St

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Matt Levatich has been the CEO of Harley-Davidson, Inc. (NYSE:HOG) since 2015. First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. 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.

See our latest analysis for Harley-Davidson

How Does Matt Levatich's Compensation Compare With Similar Sized Companies?

Our data indicates that Harley-Davidson, Inc. is worth US$5.7b, and total annual CEO compensation is US$9.1m. (This number is for the twelve months until December 2018). While we always look at total compensation first, we note that the salary component is less, at US$1.1m. We looked at a group of companies with market capitalizations from US$4.0b to US$12b, and the median CEO total compensation was US$6.9m.

Thus we can conclude that Matt Levatich receives more in total compensation than the median of a group of companies in the same market, and of similar size to Harley-Davidson, Inc.. However, this doesn't necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.

You can see, below, how CEO compensation at Harley-Davidson has changed over time.

NYSE:HOG CEO Compensation, July 16th 2019

Is Harley-Davidson, Inc. Growing?

Harley-Davidson, Inc. has reduced its earnings per share by an average of 9.0% a year, over the last three years (measured with a line of best fit). Its revenue is down -2.2% over last year.

Unfortunately, earnings per share have trended lower over the last three years. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. It could be important to check this free visual depiction of what analysts expect for the future.

Has Harley-Davidson, Inc. Been A Good Investment?

With a three year total loss of 18%, Harley-Davidson, Inc. would certainly have some dissatisfied shareholders. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary...

We compared the total CEO remuneration paid by Harley-Davidson, Inc., and compared it to remuneration at a group of similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.

Neither earnings per share nor revenue have been growing sufficiently fast to impress us, over the last three years.

Over the same period, investors would have come away with nothing in the way of share price gains. This analysis suggests to us that the CEO is paid too generously! Whatever your view on compensation, you might want to check if insiders are buying or selling Harley-Davidson shares (free trial).

If you want to buy a stock that is better than Harley-Davidson, this free list of high return, low debt companies is a great place to look.

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.