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John Hester became the CEO of Southwest Gas Holdings, Inc. (NYSE:SWX) in 2015. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we'll look at a snap shot of the business growth. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does John Hester's Compensation Compare With Similar Sized Companies?
At the time of writing our data says that Southwest Gas Holdings, Inc. has a market cap of US$4.4b, and is paying total annual CEO compensation of US$4.1m. (This figure is for the year to December 2018). That's actually a decrease on the year before. We think total compensation is more important but we note that the CEO salary is lower, at US$858k. 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.
So John Hester is paid around the average of the companies we looked at. While this data point isn't particularly informative alone, it gains more meaning when considered with business performance.
The graphic below shows how CEO compensation at Southwest Gas Holdings has changed from year to year.
Is Southwest Gas Holdings, Inc. Growing?
Over the last three years Southwest Gas Holdings, Inc. has grown its earnings per share (EPS) by an average of 13% per year (using a line of best fit). It achieved revenue growth of 13% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. You might want to check this free visual report on analyst forecasts for future earnings.
Has Southwest Gas Holdings, Inc. Been A Good Investment?
I think that the total shareholder return of 36%, over three years, would leave most Southwest Gas Holdings, Inc. shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
John Hester is paid around the same as most CEOs of similar size companies.
Few would be critical of the leadership, since returns have been juicy and earnings per share are moving in the right direction. Although the pay is a normal amount, some shareholders probably consider it fair or modest, given the good performance of the stock. So you may want to check if insiders are buying Southwest Gas Holdings shares with their own money (free access).
If you want to buy a stock that is better than Southwest Gas Holdings, this free list of high return, low debt companies is a great place to look.
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 firstname.lastname@example.org. 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.