Chip Childs became the CEO of SkyWest, Inc. (NASDAQ:SKYW) in 2016. First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Chip Childs's Compensation Compare With Similar Sized Companies?
At the time of writing our data says that SkyWest, Inc. has a market cap of US$3.1b, and is paying total annual CEO compensation of US$3.3m. (This figure is for the year to December 2018). That's a notable increase of 17% on last year. We think total compensation is more important but we note that the CEO salary is lower, at US$460k. 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$5.0m.
A first glance this seems like a real positive for shareholders, since Chip Childs is paid less than the average total compensation paid by similar sized companies. While this is a good thing, you'll need to understand the business better before you can form an opinion.
The graphic below shows how CEO compensation at SkyWest has changed from year to year.
Is SkyWest, Inc. Growing?
SkyWest, Inc. has increased its earnings per share (EPS) by an average of 54% a year, over the last three years (using a line of best fit). Its revenue is up 3.2% over last year.
This demonstrates that the company has been improving recently. A good result. It's also good to see modest revenue growth, suggesting the underlying business is healthy. You might want to check this free visual report on analyst forecasts for future earnings.
Has SkyWest, Inc. Been A Good Investment?
I think that the total shareholder return of 197%, over three years, would leave most SkyWest, Inc. 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.
It looks like SkyWest, Inc. pays its CEO less than similar sized companies. Since the business is growing, many would argue this suggests the pay is modest. The strong history of shareholder returns might even have some thinking that Chip Childs deserves a raise!
Most shareholders like to see a modestly paid CEO combined with strong performance by the company. But it is even better if company insiders are also buying shares with their own money. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling SkyWest (free visualization of insider trades).
If you want to buy a stock that is better than SkyWest, this free list of high return, low debt companies is a great place to look.
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