Yahoo Finance Does American Airlines Group Inc.'s (NASDAQ:AAL) CEO Pay Matter?
Doug Parker became the CEO of American Airlines Group Inc. (NASDAQ:AAL) in 2013. This analysis aims first to contrast CEO compensation with other large 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. The aim of all this is to consider the appropriateness of CEO pay levels.
Check out our latest analysis for American Airlines Group
How Does Doug Parker's Compensation Compare With Similar Sized Companies?
According to our data, American Airlines Group Inc. has a market capitalization of US$12b, and paid its CEO total annual compensation worth US$12m over the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at . We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. When we examined a group of companies with market caps over US$8.0b, we found that their median CEO total compensation was US$11m. (We took a wide range because the CEOs of massive companies tend to be paid similar amounts - even though some are quite a bit bigger than others).
That means Doug Parker receives fairly typical remuneration for the CEO of a large company. While this data point isn't particularly informative alone, it gains more meaning when considered with business performance.
The graphic below shows how CEO compensation at American Airlines Group has changed from year to year.
Is American Airlines Group Inc. Growing?
American Airlines Group Inc. has reduced its earnings per share by an average of 36% a year, over the last three years (measured with a line of best fit). It achieved revenue growth of 2.7% over the last year.
Sadly for shareholders, earnings per share are actually down, over three years. The modest increase in revenue in the last year isn't enough to make me overlook the disappointing change in earnings per share. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. It could be important to check this free visual depiction of what analysts expect for the future.
Has American Airlines Group Inc. Been A Good Investment?
Since shareholders would have lost about 40% over three years, some American Airlines Group Inc. shareholders would surely be feeling negative emotions. So shareholders would probably think the company shouldn't be too generous with CEO compensation.
In Summary...
Doug Parker is paid around what is normal the leaders of larger companies.
After looking at EPS and total shareholder returns, it's certainly hard to argue the company has performed well, since both metrics are down. Suffice it to say, we don't think the CEO is underpaid! CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling American Airlines Group (free visualization of insider trades).
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.
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.
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