Should You Worry About Raytheon Company’s (NYSE:RTN) CEO Pay?
Tom Kennedy has been the CEO of Raytheon Company (NYSE:RTN) since 2014. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. Next, we’ll consider growth that the business demonstrates. 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.
Check out our latest analysis for Raytheon
How Does Tom Kennedy’s Compensation Compare With Similar Sized Companies?
Our data indicates that Raytheon Company is worth US$52b, and total annual CEO compensation is US$25m. (This is based on the year to December 2017). We think total compensation is more important but we note that the CEO salary is lower, at US$1.4m. When we examined a group of companies with market caps over US$8.0b, we found that their median CEO compensation was US$11m. There aren’t very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.
Thus we can conclude that Tom Kennedy receives more in total compensation than the median of a group of large companies in the same market as Raytheon Company. However, this doesn’t necessarily mean the pay is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
You can see, below, how CEO compensation at Raytheon has changed over time.
Is Raytheon Company Growing?
Raytheon Company has increased its earnings per share (EPS) by an average of 9.5% a year, over the last three years (using a line of best fit). It achieved revenue growth of 6.7% over the last year.
I’d prefer higher revenue growth, but the modest improvement in EPS is good. Considering these factors I’d say performance has been pretty decent, though not amazing. Shareholders might be interested in this free visualization of analyst forecasts.
Has Raytheon Company Been A Good Investment?
Most shareholders would probably be pleased with Raytheon Company for providing a total return of 59% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
In Summary…
We compared total CEO remuneration at Raytheon Company with the amount paid at other large companies. As discussed above, we discovered that the company pays more than the median of that group.
One might like to have seen stronger growth, but shareholder returns have been pleasing, over the last three years. So, considering these tasty returns, the CEO compensation may be quite appropriate. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Raytheon.
If you want to buy a stock that is better than Raytheon, 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.
