How Is Xcel Energy's (NASDAQ:XEL) CEO Paid Relative To Peers?
Ben Fowke became the CEO of Xcel Energy Inc. (NASDAQ:XEL) in 2011, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Xcel Energy pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
See our latest analysis for Xcel Energy
How Does Total Compensation For Ben Fowke Compare With Other Companies In The Industry?
According to our data, Xcel Energy Inc. has a market capitalization of US$37b, and paid its CEO total annual compensation worth US$17m over the year to December 2019. We note that's an increase of 39% above last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.4m.
For comparison, other companies in the industry with market capitalizations above US$8.0b, reported a median total CEO compensation of US$14m. From this we gather that Ben Fowke is paid around the median for CEOs in the industry. What's more, Ben Fowke holds US$32m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Component | 2019 | 2018 | Proportion (2019) |
Salary | US$1.4m | US$1.3m | 8% |
Other | US$16m | US$11m | 92% |
Total Compensation | US$17m | US$12m | 100% |
Speaking on an industry level, nearly 14% of total compensation represents salary, while the remainder of 86% is other remuneration. It's interesting to note that Xcel Energy allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
Xcel Energy Inc.'s Growth
Xcel Energy Inc. has seen its earnings per share (EPS) increase by 5.7% a year over the past three years. Its revenue is down 3.8% over the previous year.
We would argue that the lack of revenue growth in the last year is less than ideal, but the modest improvement in EPS is good. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Xcel Energy Inc. Been A Good Investment?
We think that the total shareholder return of 55%, over three years, would leave most Xcel Energy Inc. shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
In Summary...
As previously discussed, Ben is compensated close to the median for companies of its size, and which belong to the same industry. But the company has been found wanting in terms of EPS growth over the past three years. At the same time, shareholder returns have remained strong over the same period. So while shareholders shouldn't be overly concerned about CEO compensation, we suspect most would prefer to see improved performance, before a bump in pay.
We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 3 warning signs for Xcel Energy (of which 1 shouldn't be ignored!) that you should know about in order to have a holistic understanding of the stock.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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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