Key Insights

• Allison Transmission Holdings' Annual General Meeting to take place on 8th of May
• Total pay for CEO Dave Graziosi includes US$1.04m salary
• The overall pay is comparable to the industry average
• Allison Transmission Holdings' total shareholder return over the past three years was 83% while its EPS grew by 46% over the past three years

We have been pretty impressed with the performance at Allison Transmission Holdings, Inc. (NYSE:ALSN) recently and CEO Dave Graziosi deserves a mention for their role in it. The pleasing results would be something shareholders would keep in mind at the upcoming AGM on 8th of May. This would also be a chance for them to hear the board review the financial results, discuss future company strategy and vote on any resolutions such as executive remuneration. We think the CEO has done a pretty decent job and we discuss why the CEO compensation is appropriate.

Comparing Allison Transmission Holdings, Inc.'s CEO Compensation With The Industry

At the time of writing, our data shows that Allison Transmission Holdings, Inc. has a market capitalization of US$6.4b, and reported total annual CEO compensation of US$10m for the year to December 2023. We note that's an increase of 11% above last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.0m.

On examining similar-sized companies in the American Machinery industry with market capitalizations between US$4.0b and US$12b, we discovered that the median CEO total compensation of that group was US$9.0m. So it looks like Allison Transmission Holdings compensates Dave Graziosi in line with the median for the industry. Furthermore, Dave Graziosi directly owns US$12m worth of shares in the company, implying that they are deeply invested in the company's success.

Speaking on an industry level, nearly 15% of total compensation represents salary, while the remainder of 85% is other remuneration. Allison Transmission Holdings pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Allison Transmission Holdings, Inc.'s Growth Numbers

Over the past three years, Allison Transmission Holdings, Inc. has seen its earnings per share (EPS) grow by 46% per year. Its revenue is up 8.8% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's nice to see revenue heading northwards, as this is consistent with healthy business conditions. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Allison Transmission Holdings, Inc. Been A Good Investment?

Boasting a total shareholder return of 83% over three years, Allison Transmission Holdings, Inc. has done well by shareholders. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

The company's solid performance might have made most shareholders happy, possibly making CEO remuneration the least of the matters to be discussed in the AGM. 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.

CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 2 warning signs for Allison Transmission Holdings that investors should look into moving forward.

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.

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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.