This Is Why We Think HEICO Corporation's (NYSE:HEI) CEO Might Get A Pay Rise Approved By Shareholders

Key Insights

• HEICO will host its Annual General Meeting on 17th of March

• Total pay for CEO Laurans Mendelson includes US$1.27m salary

• Total compensation is 45% below industry average

• HEICO's total shareholder return over the past three years was 100% while its EPS was down 1.8% over the past three years

The decent performance at HEICO Corporation (NYSE:HEI) recently will please most shareholders as they go into the AGM coming up on 17th of March. This would also be a chance for them to hear the board review the financial results, discuss future company strategy to further improve the business and vote on any resolutions such as executive remuneration. In our analysis below, we discuss why we think the CEO compensation looks acceptable and the case for a raise.

See our latest analysis for HEICO

How Does Total Compensation For Laurans Mendelson Compare With Other Companies In The Industry?

At the time of writing, our data shows that HEICO Corporation has a market capitalization of US$20b, and reported total annual CEO compensation of US$9.1m for the year to October 2022. That is, the compensation was roughly the same as last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.3m.

For comparison, other companies in the American Aerospace & Defense industry with market capitalizations above US$8.0b, reported a median total CEO compensation of US$16m. This suggests that Laurans Mendelson is paid below the industry median. Moreover, Laurans Mendelson also holds US$667m worth of HEICO stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

On an industry level, roughly 18% of total compensation represents salary and 82% is other remuneration. In HEICO's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

HEICO Corporation's Growth

Over the last three years, HEICO Corporation has shrunk its earnings per share by 1.8% per year. Its revenue is up 21% over the last year.

The reduction in EPS, over three years, is arguably concerning. But on the other hand, revenue growth is strong, suggesting a brighter future. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has HEICO Corporation Been A Good Investment?

Boasting a total shareholder return of 100% over three years, HEICO Corporation 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.

To Conclude...

The company's overall performance, while not bad, could be better. If it manages to keep up the current streak, CEO remuneration could well be one of shareholders' least concerns. In fact, strategic decisions that could impact the future of the business might be a far more interesting topic for investors as it would help them set their longer-term expectations.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 1 warning sign for HEICO that investors should look into moving forward.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.

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