Key Insights

• Alaska Air Group's Annual General Meeting to take place on 9th of May
• CEO Ben Minicucci's total compensation includes salary of US$637.7k
• The overall pay is 275% above the industry average
• Alaska Air Group's EPS grew by 85% over the past three years while total shareholder loss over the past three years was 36%

In the past three years, the share price of Alaska Air Group, Inc. (NYSE:ALK) has struggled to grow and now shareholders are sitting on a loss. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 9th of May. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

Comparing Alaska Air Group, Inc.'s CEO Compensation With The Industry

Our data indicates that Alaska Air Group, Inc. has a market capitalization of US$5.3b, and total annual CEO compensation was reported as US$10m for the year to December 2023. We note that's an increase of 59% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$638k.

On examining similar-sized companies in the American Airlines industry with market capitalizations between US$4.0b and US$12b, we discovered that the median CEO total compensation of that group was US$2.8m. This suggests that Ben Minicucci is paid more than the median for the industry. What's more, Ben Minicucci holds US$5.9m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

On an industry level, roughly 11% of total compensation represents salary and 89% is other remuneration. In Alaska Air Group's case, non-salary compensation represents a greater slice of total remuneration, 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.

A Look at Alaska Air Group, Inc.'s Growth Numbers

Alaska Air Group, Inc. has seen its earnings per share (EPS) increase by 85% a year over the past three years. In the last year, its revenue is up 3.0%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Alaska Air Group, Inc. Been A Good Investment?

With a total shareholder return of -36% over three years, Alaska Air Group, Inc. shareholders would by and large be disappointed. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 1 warning sign for Alaska Air Group that investors should think about before committing capital to this stock.

Important note: Alaska Air Group is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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.