Want to participate in a short research study ? Help shape the future of investing tools and you could win a $250 gift card!
Brad Tilden has been the CEO of Alaska Air Group, Inc. ( NYSE:ALK ) since 2012. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we'll look at a snap shot of the business growth. 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.
How Does Brad Tilden's Compensation Compare With Similar Sized Companies?
According to our data, Alaska Air Group, Inc. has a market capitalization of US$7.9b, and pays its CEO total annual compensation worth US$4.4m. (This figure is for the year to December 2018). While we always look at total compensation first, we note that the salary component is less, at US$564k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$4.0b to US$12b. The median total CEO compensation was US$6.9m.
A first glance this seems like a real positive for shareholders, since Brad Tilden is paid less than the average total compensation paid by similar sized companies. While this is a good thing, you'll need to understand the business better before you can form an opinion.
You can see, below, how CEO compensation at Alaska Air Group has changed over time.
Is Alaska Air Group, Inc. Growing?
Alaska Air Group, Inc. has reduced its earnings per share by an average of 14% a year, over the last three years (measured with a line of best fit). In the last year, its revenue is up 4.0%.
Unfortunately, earnings per share have trended lower over the last 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. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. You might want to check this free visual report on analyst forecasts for future earnings .
Has Alaska Air Group, Inc. Been A Good Investment?
Alaska Air Group, Inc. has not done too badly by shareholders, with a total return of 4.2%, over three years. But they would probably prefer not to see CEO compensation far in excess of the median.
Alaska Air Group, Inc. is currently paying its CEO below what is normal for companies of its size.
The compensation paid to Brad Tilden is lower than is usual at similar sized companies. But the company lacks earnings per share growth, and returns to shareholders are less than stellar. There is room for improved company performance, but we don't see the CEO pay as a big issue here. Whatever your view on compensation, you might want to check if insiders are buying or selling Alaska Air Group shares (free trial).
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.
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 email@example.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.