Our View On Leidos Holdings' (NYSE:LDOS) CEO Pay
Roger Krone has been the CEO of Leidos Holdings, Inc. (NYSE:LDOS) since 2014, 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 Leidos Holdings.
See our latest analysis for Leidos Holdings
Comparing Leidos Holdings, Inc.'s CEO Compensation With the industry
Our data indicates that Leidos Holdings, Inc. has a market capitalization of US$13b, and total annual CEO compensation was reported as US$11m for the year to January 2020. We note that's an increase of 8.5% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.2m.
On comparing similar companies in the industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$11m. So it looks like Leidos Holdings compensates Roger Krone in line with the median for the industry. What's more, Roger Krone holds US$13m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Component | 2020 | 2018 | Proportion (2020) |
Salary | US$1.2m | US$1.1m | 11% |
Other | US$9.5m | US$8.7m | 89% |
Total Compensation | US$11m | US$9.8m | 100% |
Speaking on an industry level, nearly 14% of total compensation represents salary, while the remainder of 86% is other remuneration. Leidos Holdings sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
Leidos Holdings, Inc.'s Growth
Leidos Holdings, Inc.'s earnings per share (EPS) grew 24% per year over the last three years. Its revenue is up 9.9% over the last year.
Shareholders would be glad to know that the company has improved itself over the last few years. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Leidos Holdings, Inc. Been A Good Investment?
We think that the total shareholder return of 54%, over three years, would leave most Leidos Holdings, Inc. shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.
In Summary...
As previously discussed, Roger is compensated close to the median for companies of its size, and which belong to the same industry. Few would be critical of the leadership, since returns have been juicy and EPS are moving in the right direction. Although the pay is close to the industry median, overall performance is excellent, so we don't think the CEO is paid too generously. Stockholders might even be okay with a bump in pay, seeing as how investor returns have been so strong.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 1 warning sign for Leidos Holdings that investors should think about before committing capital to this stock.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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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