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Is Hawaiian Electric Industries, Inc. (NYSE:HE) Overpaying Its CEO?

Simply Wall St

In 2006, Connie Lau was appointed CEO of Hawaiian Electric Industries, Inc. (NYSE:HE). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. 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. This process should give us an idea about how appropriately the CEO is paid.

Check out our latest analysis for Hawaiian Electric Industries

How Does Connie Lau's Compensation Compare With Similar Sized Companies?

According to our data, Hawaiian Electric Industries, Inc. has a market capitalization of US$4.2b, and paid its CEO total annual compensation worth US$4.9m over the year to December 2019. That's actually a decrease on the year before. While we always look at total compensation first, we note that the salary component is less, at US$926k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. When we examined a selection of companies with market caps ranging from US$2.0b to US$6.4b, we found the median CEO total compensation was US$6.0m.

Pay mix tells us a lot about how a company functions versus the wider industry, and it's no different in the case of Hawaiian Electric Industries. On a sector level, around 12% of total compensation represents salary and 88% is other remuneration. Hawaiian Electric Industries pays out 19% of aggregate payment in the shape of a salary, which is significantly higher than the industry average.

That means Connie Lau receives fairly typical remuneration for the CEO of a company that size. This doesn't tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context. You can see a visual representation of the CEO compensation at Hawaiian Electric Industries, below.

NYSE:HE CEO Compensation May 27th 2020
NYSE:HE CEO Compensation May 27th 2020

Is Hawaiian Electric Industries, Inc. Growing?

Hawaiian Electric Industries, Inc. has reduced its earnings per share by an average of 1.2% a year, over the last three years (measured with a line of best fit). In the last year, its revenue changed by just 0.5%.

In the last three years the company has failed to grow earnings per share. And the flat revenue hardly impresses. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. It could be important to check this free visual depiction of what analysts expect for the future.

Has Hawaiian Electric Industries, Inc. Been A Good Investment?

Hawaiian Electric Industries, Inc. has generated a total shareholder return of 27% over three years, so most shareholders would be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

Connie Lau is paid around the same as most CEOs of similar size companies.

We're not seeing great strides in earnings per share, and total returns were decent but not amazing in the last three years. We're not saying the CEO pay is too generous, but we'd venture the company should look to improve its business metrics (and share price) before paying any more. On another note, we've spotted 2 warning signs for Hawaiian Electric Industries that investors should look into moving forward.

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

Love or hate this article? Concerned about the content? Get in touch with us directly. Alternatively, email 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. 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. Thank you for reading.