Al Hodnik became the CEO of ALLETE, Inc. (NYSE:ALE) in 2010. 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. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Al Hodnik's Compensation Compare With Similar Sized Companies?
According to our data, ALLETE, Inc. has a market capitalization of US$4.6b, and paid its CEO total annual compensation worth US$3.5m over the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$633k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We looked at a group of companies with market capitalizations from US$2.0b to US$6.4b, and the median CEO total compensation was US$5.1m.
This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. However, before we heap on the praise, we should delve deeper to understand business performance.
You can see, below, how CEO compensation at ALLETE has changed over time.
Is ALLETE, Inc. Growing?
On average over the last three years, ALLETE, Inc. has grown earnings per share (EPS) by 7.0% each year (using a line of best fit). It achieved revenue growth of 2.9% over the last year.
I would argue that the improvement in revenue isn't particularly impressive, but I'm happy with the modest EPS growth. It's clear the performance has been quite decent, but it it falls short of outstanding,based on this information. It could be important to check this free visual depiction of what analysts expect for the future.
Has ALLETE, Inc. Been A Good Investment?
Boasting a total shareholder return of 59% over three years, ALLETE, Inc. 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.
It looks like ALLETE, Inc. pays its CEO less than similar sized companies.
It's well worth noting that while Al Hodnik is paid below what is normal at companies of similar size, the returns have been very pleasing, over the last three years. We would like to see EPS growth, but in our view it seems the CEO is modestly remunerated. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling ALLETE (free visualization of insider trades).
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.
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