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Should You Worry About HEICO Corporation's (NYSE:HEI) CEO Pay?

Simply Wall St

Laurans Mendelson became the CEO of HEICO Corporation (NYSE:HEI) in 1990. First, this article will compare CEO compensation with compensation at other large companies. 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 method should give us information to assess how appropriately the company pays the CEO.

View our latest analysis for HEICO

How Does Laurans Mendelson's Compensation Compare With Similar Sized Companies?

According to our data, HEICO Corporation has a market capitalization of US$15b, and pays its CEO total annual compensation worth US$6.8m. (This is based on the year to October 2018). We think total compensation is more important but we note that the CEO salary is lower, at US$1.0m. We took a group of companies with market capitalizations over US$8.0b, and calculated the median CEO total compensation to be US$11m. There aren't very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.

A first glance this seems like a real positive for shareholders, since Laurans Mendelson is paid less than the average total compensation paid by other large companies. While this is a good thing, you'll need to understand the business better before you can form an opinion.

You can see a visual representation of the CEO compensation at HEICO, below.

NYSE:HEI CEO Compensation, September 10th 2019

Is HEICO Corporation Growing?

On average over the last three years, HEICO Corporation has grown earnings per share (EPS) by 25% each year (using a line of best fit). Its revenue is up 16% over 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 HEICO Corporation Been A Good Investment?

I think that the total shareholder return of 283%, over three years, would leave most HEICO Corporation 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...

HEICO Corporation is currently paying its CEO below what is normal for large 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 Laurans Mendelson 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. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at HEICO.

If you want to buy a stock that is better than HEICO, 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 editorial-team@simplywallst.com. 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.