Steve Demetriou has been the CEO of Jacobs Engineering Group Inc. (NYSE:JEC) since 2015. First, this article will compare CEO compensation with compensation at other large companies. After that, we will consider the growth in the business. 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 Steve Demetriou's Compensation Compare With Similar Sized Companies?
Our data indicates that Jacobs Engineering Group Inc. is worth US$13b, and total annual CEO compensation was reported as US$13m for the year to September 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$1.3m. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. When we examined a group of companies with market caps over US$8.0b, we found that their median CEO total compensation was US$11m. Once you start looking at very large companies, you need to take a broader range, because there simply aren't that many of them.
So Steve Demetriou receives a similar amount to the median CEO pay, amongst the companies we looked at. 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.
The graphic below shows how CEO compensation at Jacobs Engineering Group has changed from year to year.
Is Jacobs Engineering Group Inc. Growing?
Jacobs Engineering Group Inc. has increased its earnings per share (EPS) by an average of 6.4% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 64%.
I like the look of the strong year-on-year improvement in revenue. With that in mind, the modestly improving EPS seems positive. I wouldn't say this is necessarily top notch growth, but it is certainly promising. It could be important to check this free visual depiction of what analysts expect for the future.
Has Jacobs Engineering Group Inc. Been A Good Investment?
Most shareholders would probably be pleased with Jacobs Engineering Group Inc. for providing a total return of 89% 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.
Steve Demetriou is paid around the same as most CEOs of large companies.
While the growth could be better, the shareholder returns are clearly good. So considering most shareholders would be happy, we'd say the CEO pay is appropriate. Whatever your view on compensation, you might want to check if insiders are buying or selling Jacobs Engineering Group shares (free trial).
Important note: Jacobs Engineering Group may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
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 email@example.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.