Robert Sprowls has been the CEO of American States Water Company (NYSE:AWR) since 2009, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for American States Water.
Comparing American States Water Company's CEO Compensation With the industry
At the time of writing, our data shows that American States Water Company has a market capitalization of US$2.7b, and reported total annual CEO compensation of US$5.0m for the year to December 2019. Notably, that's an increase of 66% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$796k.
For comparison, other companies in the same industry with market capitalizations ranging between US$2.0b and US$6.4b had a median total CEO compensation of US$3.4m. This suggests that Robert Sprowls is paid more than the median for the industry. Furthermore, Robert Sprowls directly owns US$9.3m worth of shares in the company, implying that they are deeply invested in the company's success.
Speaking on an industry level, nearly 31% of total compensation represents salary, while the remainder of 69% is other remuneration. American States Water pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
American States Water Company's Growth
American States Water Company's earnings per share (EPS) grew 7.1% per year over the last three years. In the last year, its revenue is up 3.5%.
We would argue that the improvement in revenue is good, but isn't particularly impressive, but the modest improvement in EPS is good. Considering these factors we'd say performance has been pretty decent, though not amazing. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has American States Water Company Been A Good Investment?
We think that the total shareholder return of 58%, over three years, would leave most American States Water Company shareholders smiling. 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, Robert is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. But shareholder returns have been positive for the last three years. On the other hand, EPS growth — over the same period — is not as impressive. We'd ideally want to see higher EPS growth, but CEO compensation seems to be within reason, given high shareholder returns.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 1 warning sign for American States Water that investors should look into moving forward.
Important note: American States Water 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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