Chris Nassetta became the CEO of Hilton Worldwide Holdings Inc. (NYSE:HLT) in 2007, 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 Hilton Worldwide Holdings pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
How Does Total Compensation For Chris Nassetta Compare With Other Companies In The Industry?
Our data indicates that Hilton Worldwide Holdings Inc. has a market capitalization of US$22b, and total annual CEO compensation was reported as US$21m for the year to December 2019. That's a modest increase of 5.8% on the prior year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.3m.
In comparison with other companies in the industry with market capitalizations over US$8.0b , the reported median total CEO compensation was US$12m. Accordingly, our analysis reveals that Hilton Worldwide Holdings Inc. pays Chris Nassetta north of the industry median. Moreover, Chris Nassetta also holds US$235m worth of Hilton Worldwide Holdings stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
On an industry level, roughly 25% of total compensation represents salary and 75% is other remuneration. It's interesting to note that Hilton Worldwide Holdings allocates a smaller portion of compensation to salary 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.
Hilton Worldwide Holdings Inc.'s Growth
Hilton Worldwide Holdings Inc.'s earnings per share (EPS) grew 38% per year over the last three years. 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. It's always a tough situation when revenues are not growing, but ultimately profits are more important. 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 Hilton Worldwide Holdings Inc. Been A Good Investment?
Hilton Worldwide Holdings Inc. has served shareholders reasonably well, with a total return of 30% over three years. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
As previously discussed, Chris is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. However, we must not forget that the EPS growth has been very strong over three years. We also think investor returns are steady over the same time period. While it may be worth researching further, we don't see a problem with the high CEO pay, given the good EPS growth.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 1 warning sign for Hilton Worldwide Holdings that investors should be aware of in a dynamic business environment.
Important note: Hilton Worldwide Holdings is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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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