Yahoo Finance Key Things To Understand About Auckland International Airport's (NZSE:AIA) CEO Pay Cheque
Adrian Littlewood became the CEO of Auckland International Airport Limited (NZSE:AIA) in 2012, 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 evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Check out our latest analysis for Auckland International Airport
How Does Total Compensation For Adrian Littlewood Compare With Other Companies In The Industry?
At the time of writing, our data shows that Auckland International Airport Limited has a market capitalization of NZ$11b, and reported total annual CEO compensation of NZ$2.3m for the year to June 2020. That is, the compensation was roughly the same as last year. We note that the salary portion, which stands at NZ$1.24m constitutes the majority of total compensation received by the CEO.
In comparison with other companies in the industry with market capitalizations ranging from NZ$5.7b to NZ$17b, the reported median CEO total compensation was NZ$1.7m. This suggests that Adrian Littlewood is paid more than the median for the industry. Furthermore, Adrian Littlewood directly owns NZ$1.9m worth of shares in the company.
Component | 2020 | 2019 | Proportion (2020) |
Salary | NZ$1.2m | NZ$1.3m | 53% |
Other | NZ$1.1m | NZ$1.1m | 47% |
Total Compensation | NZ$2.3m | NZ$2.4m | 100% |
Speaking on an industry level, nearly 52% of total compensation represents salary, while the remainder of 48% is other remuneration. Our data reveals that Auckland International Airport allocates salary more or less in line with the wider market. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
Auckland International Airport Limited's Growth
Auckland International Airport Limited has reduced its earnings per share by 18% a year over the last three years. Its revenue is down 24% over the previous year.
Few shareholders would be pleased to read that EPS have declined. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Auckland International Airport Limited Been A Good Investment?
Auckland International Airport Limited has generated a total shareholder return of 27% over three years, so most shareholders would be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.
To Conclude...
As we touched on above, Auckland International Airport Limited is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. This doesn't look great when you realize that the company has been suffering from negative EPS growth for the last three years. While shareholder returns are acceptable, they don't delight. So you can understand why we do not think CEO compensation is particularly modest!
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We did our research and spotted 2 warning signs for Auckland International Airport that investors should look into moving forward.
Important note: Auckland International Airport is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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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