This article will reflect on the compensation paid to Nick Akins who has served as CEO of American Electric Power Company, Inc. (NASDAQ:AEP) since 2011. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for American Electric Power Company.
How Does Total Compensation For Nick Akins Compare With Other Companies In The Industry?
At the time of writing, our data shows that American Electric Power Company, Inc. has a market capitalization of US$45b, and reported total annual CEO compensation of US$14m for the year to December 2019. Notably, that’s an increase of 19% over the year before. While this analysis focuses on total compensation, it’s worth acknowledging that the salary portion is lower, valued at US$1.5m.
In comparison with other companies in the industry with market capitalizations over US$8.0b , the reported median total CEO compensation was US$14m. So it looks like American Electric Power Company compensates Nick Akins in line with the median for the industry. Moreover, Nick Akins also holds US$9.8m worth of American Electric Power Company stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Talking in terms of the industry, salary represented approximately 14% of total compensation out of all the companies we analyzed, while other remuneration made up 86% of the pie. It’s interesting to note that American Electric Power Company allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it’s an indicator that the executive’s salary is tied to company performance.
American Electric Power Company, Inc.’s Growth
American Electric Power Company, Inc.’s earnings per share (EPS) grew 49% per year over the last three years. Its revenue is down 3.8% over the previous year.
This demonstrates that the company has been improving recently and is good news for the shareholders. The lack of revenue growth isn’t ideal, but it is the bottom line that counts most in business. Looking ahead, you might want to check this free visual report on analyst forecasts for the company’s future earnings..
Has American Electric Power Company, Inc. Been A Good Investment?
Boasting a total shareholder return of 36% over three years, American Electric Power Company, Inc. has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
As previously discussed, Nick is compensated close to the median for companies of its size, and which belong to the same industry. Few would be critical of the leadership, since returns have been juicy and EPS are moving in the right direction. Although the pay is close to the industry median, overall performance is excellent, so we don’t think the CEO is paid too generously. Stockholders might even be okay with a bump in pay, seeing as how investor returns have been so strong.
CEO compensation can have a massive impact on performance, but it’s just one element. We’ve identified 1 warning sign for American Electric Power Company that investors should be aware of in a dynamic business environment.
Switching gears from American Electric Power Company, if you’re hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
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.