Wahid Nawabi became the CEO of AeroVironment, Inc. (NASDAQ:AVAV) in 2016. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.
How Does Wahid Nawabi's Compensation Compare With Similar Sized Companies?
At the time of writing our data says that AeroVironment, Inc. has a market cap of US$1.6b, and is paying total annual CEO compensation of US$1.7m. (This number is for the twelve months until April 2018). We think total compensation is more important but we note that the CEO salary is lower, at US$535k. We looked at a group of companies with market capitalizations from US$1.0b to US$3.2b, and the median CEO total compensation was US$3.6m.
A first glance this seems like a real positive for shareholders, since Wahid Nawabi 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.
You can see, below, how CEO compensation at AeroVironment has changed over time.
Is AeroVironment, Inc. Growing?
On average over the last three years, AeroVironment, Inc. has grown earnings per share (EPS) by 68% each year (using a line of best fit). It achieved revenue growth of 40% over the last year.
This demonstrates that the company has been improving recently. A good result. The combination of strong revenue growth with medium-term earnings per share improvement certainly points to the kind of growth I like to see. It could be important to check this free visual depiction of what analysts expect for the future.
Has AeroVironment, Inc. Been A Good Investment?
Most shareholders would probably be pleased with AeroVironment, Inc. for providing a total return of 131% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
It looks like AeroVironment, Inc. pays its CEO less than similar sized companies. Many would consider this to indicate that the pay is modest since the business is growing. The strong history of shareholder returns might even have some thinking that Wahid Nawabi deserves a raise!
It is relatively rare to see a modestly paid CEO when performance is so impressive. It would be even more positive if company insiders are buying shares. Whatever your view on compensation, you might want to check if insiders are buying or selling AeroVironment shares (free trial).
If you want to buy a stock that is better than AeroVironment, this free list of high return, low debt companies is a great place to look.
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