Yahoo Finance How Should Investors React To Kratos Defense & Security Solutions, Inc.'s (NASDAQ:KTOS) CEO Pay?
Eric DeMarco has been the CEO of Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) since 2004. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we'll consider growth that the business demonstrates. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.
View our latest analysis for Kratos Defense & Security Solutions
How Does Eric DeMarco's Compensation Compare With Similar Sized Companies?
Our data indicates that Kratos Defense & Security Solutions, Inc. is worth US$1.6b, and total annual CEO compensation was reported as US$5.5m for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$760k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$1.0b to US$3.2b. The median total CEO compensation was US$4.7m.
Pay mix tells us a lot about how a company functions versus the wider industry, and it's no different in the case of Kratos Defense & Security Solutions. On a sector level, around 18% of total compensation represents salary and 82% is other remuneration. Our data reveals that Kratos Defense & Security Solutions allocates salary in line with the wider market.
So Eric DeMarco is paid around the average of the companies we looked at. This doesn't tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context. The graphic below shows how CEO compensation at Kratos Defense & Security Solutions has changed from year to year.
Is Kratos Defense & Security Solutions, Inc. Growing?
Over the last three years Kratos Defense & Security Solutions, Inc. has seen earnings per share (EPS) move in a positive direction by an average of 100% per year (using a line of best fit). Its revenue is up 16% over last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's a real positive to see this sort of growth in a single year. That suggests a healthy and growing business. It could be important to check this free visual depiction of what analysts expect for the future.
Has Kratos Defense & Security Solutions, Inc. Been A Good Investment?
Most shareholders would probably be pleased with Kratos Defense & Security Solutions, Inc. for providing a total return of 95% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
In Summary...
Remuneration for Eric DeMarco is close enough to the median pay for a CEO of a similar sized company .
The company is growing earnings per share and total shareholder returns have been pleasing. So one could argue the CEO compensation is quite modest, if you consider company performance! Shifting gears from CEO pay for a second, we've spotted 3 warning signs for Kratos Defense & Security Solutions you should be aware of, and 1 of them is significant.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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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