David Abney has been the CEO of United Parcel Service, Inc. (NYSE:UPS) since 2014. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. Next, we'll consider growth that the business demonstrates. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
How Does David Abney's Compensation Compare With Similar Sized Companies?
Our data indicates that United Parcel Service, Inc. is worth US$99b, and total annual CEO compensation was reported as US$15m for the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$1.2m. 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. There aren't very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.
It would therefore appear that United Parcel Service, Inc. pays David Abney more than the median CEO remuneration at large companies, in the same market. However, this fact alone doesn't mean the remuneration is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.
You can see a visual representation of the CEO compensation at United Parcel Service, below.
Is United Parcel Service, Inc. Growing?
United Parcel Service, Inc. has increased its earnings per share (EPS) by an average of 9.9% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 3.4%.
I would argue that the improvement in revenue isn't particularly impressive, but the modest improvement in EPS is good. Considering these factors I'd say performance has been pretty decent, though not amazing. You might want to check this free visual report on analyst forecasts for future earnings.
Has United Parcel Service, Inc. Been A Good Investment?
United Parcel Service, Inc. has served shareholders reasonably well, with a total return of 17% over three years. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
We examined the amount United Parcel Service, Inc. pays its CEO, and compared it to the amount paid by other large companies. As discussed above, we discovered that the company pays more than the median of that group.
We generally prefer to see stronger EPS growth, and we're not particularly impressed with the total shareholder return, over the last three years. So it's certainly hard to argue that the CEO is modestly paid, although we don't see the remuneration as an issue. So you may want to check if insiders are buying United Parcel Service shares with their own money (free access).
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.