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Wahid Nawabi became the CEO of AeroVironment, Inc. (NASDAQ:AVAV) in 2016, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether AeroVironment pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Comparing AeroVironment, Inc.'s CEO Compensation With the industry
At the time of writing, our data shows that AeroVironment, Inc. has a market capitalization of US$1.9b, and reported total annual CEO compensation of US$3.1m for the year to April 2020. We note that's an increase of 49% above last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$607k.
On examining similar-sized companies in the industry with market capitalizations between US$1.0b and US$3.2b, we discovered that the median CEO total compensation of that group was US$5.7m. This suggests that Wahid Nawabi is paid below the industry median. Moreover, Wahid Nawabi also holds US$5.3m worth of AeroVironment stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Talking in terms of the industry, salary represented approximately 18% of total compensation out of all the companies we analyzed, while other remuneration made up 82% of the pie. AeroVironment pays out 20% of remuneration in the form of a salary, significantly higher than the industry average. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
A Look at AeroVironment, Inc.'s Growth Numbers
AeroVironment, Inc.'s earnings per share (EPS) grew 12% per year over the last three years. In the last year, its revenue is up 14%.
This demonstrates that the company has been improving recently and is good news for the shareholders. It's a real positive to see this sort of revenue growth in a single year. That suggests a healthy and growing 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 AeroVironment, Inc. Been A Good Investment?
Most shareholders would probably be pleased with AeroVironment, Inc. for providing a total return of 90% over three years. 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 previously discussed, Wahid is compensated less than what is normal for CEOs of companies of similar size, and which belong to the same industry. Considering robust EPS growth, we believe Wahid to be modestly paid. Given the strong history of shareholder returns, the shareholders are probably very happy with Wahid's performance.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 1 warning sign for AeroVironment that investors should think about before committing capital to this stock.
Switching gears from AeroVironment, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
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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