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Should You Worry About Kratos Defense & Security Solutions, Inc.'s (NASDAQ:KTOS) CEO Pay Cheque?

Simply Wall St

In 2004 Eric DeMarco was appointed CEO of Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS). First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.

Check out our latest analysis for Kratos Defense & Security Solutions

How Does Eric DeMarco's Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Kratos Defense & Security Solutions, Inc. has a market cap of US$1.6b, and is paying total annual CEO compensation of US$5.5m. (This figure is for the year to December 2018). That's a notable increase of 54% on last year. While we always look at total compensation first, we note that the salary component is less, at US$760k. We examined companies with market caps from US$1.0b to US$3.2b, and discovered that the median CEO total compensation of that group was US$3.7m.

It would therefore appear that Kratos Defense & Security Solutions, Inc. pays Eric DeMarco more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

You can see, below, how CEO compensation at Kratos Defense & Security Solutions has changed over time.

NasdaqGS:KTOS CEO Compensation, April 22nd 2019

Is Kratos Defense & Security Solutions, Inc. Growing?

On average over the last three years, Kratos Defense & Security Solutions, Inc. has grown earnings per share (EPS) by 44% each year (using a line of best fit). Its revenue is up 2.4% over last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. It could be important to check this free visual depiction of what analysts expect for the future.

Has Kratos Defense & Security Solutions, Inc. Been A Good Investment?

Most shareholders would probably be pleased with Kratos Defense & Security Solutions, Inc. for providing a total return of 187% over three years. 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.

In Summary...

We examined the amount Kratos Defense & Security Solutions, Inc. pays its CEO, and compared it to the amount paid by similar sized companies. Our data suggests that it pays above the median CEO pay within that group.

Importantly, though, the company has impressed with its earnings per share growth, over three years. Even better, returns to shareholders have been plentiful, over the same time period. As a result of this good performance, the CEO remuneration may well be quite reasonable. Shareholders may want to check for free if Kratos Defense & Security Solutions insiders are buying or selling shares.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.