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This article will reflect on the compensation paid to Eric DeMarco who has served as CEO of Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) since 2004. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
See our latest analysis for Kratos Defense & Security Solutions
Comparing Kratos Defense & Security Solutions, Inc.'s CEO Compensation With the industry
Our data indicates that Kratos Defense & Security Solutions, Inc. has a market capitalization of US$2.5b, and total annual CEO compensation was reported as US$5.7m for the year to December 2019. That's mostly flat as compared to the prior year's compensation. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$760k.
On comparing similar companies from the same industry with market caps ranging from US$2.0b to US$6.4b, we found that the median CEO total compensation was US$7.5m. This suggests that Kratos Defense & Security Solutions remunerates its CEO largely in line with the industry average. What's more, Eric DeMarco holds US$10.0m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
| Component | 2019 | 2018 | Proportion (2019) |
| Salary | US$760k | US$760k | 13% |
| Other | US$4.9m | US$4.8m | 87% |
| Total Compensation | US$5.7m | US$5.5m | 100% |
Talking in terms of the industry, salary represented approximately 17% of total compensation out of all the companies we analyzed, while other remuneration made up 83% of the pie. Kratos Defense & Security Solutions sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
Kratos Defense & Security Solutions, Inc.'s Growth
Over the past three years, Kratos Defense & Security Solutions, Inc. has seen its earnings per share (EPS) grow by 108% per year. In the last year, its revenue is up 4.3%.
Shareholders would be glad to know that the company has improved itself over the last few years. It's also good to see modest revenue growth, suggesting the underlying business is healthy. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
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 97% 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.