Keith Barr has been the CEO of InterContinental Hotels Group PLC (LON:IHG) since 2017. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. After that, we will consider the growth in the business. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Keith Barr’s Compensation Compare With Similar Sized Companies?
Our data indicates that InterContinental Hotels Group PLC is worth UK£9.4b, and total annual CEO compensation was reported as US$3.1m for the year to December 2018. While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$792k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We took a group of companies with market capitalizations over UK£6.1b, and calculated the median CEO total compensation to be UK£3.5m. Once you start looking at very large companies, you need to take a broader range, because there simply aren’t that many of them.
So Keith Barr receives a similar amount to the median CEO pay, amongst the companies we looked at. Although this fact alone doesn’t tell us a great deal, it becomes more relevant when considered against the business performance.
You can see, below, how CEO compensation at InterContinental Hotels Group has changed over time.
Is InterContinental Hotels Group PLC Growing?
On average over the last three years, InterContinental Hotels Group PLC has shrunk earnings per share by 22% each year (measured with a line of best fit). It achieved revenue growth of 9.0% over the last year.
Sadly for shareholders, earnings per share are actually down, over three years. The fairly low revenue growth fails to impress given that the earnings per share is down. It’s hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Shareholders might be interested in this free visualization of analyst forecasts.
Has InterContinental Hotels Group PLC Been A Good Investment?
Boasting a total shareholder return of 48% over three years, InterContinental Hotels Group PLC has done well by shareholders. 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.
Remuneration for Keith Barr is close enough to the median pay for a CEO of a large company .
We feel that earnings per share have been a bit disappointing, but it’s nice to see positive shareholder returns over the last three years. So we can’t see a reason to suggest the pay is inappropriate. Whatever your view on compensation, you might want to check if insiders are buying or selling InterContinental Hotels Group shares (free trial).
Important note: InterContinental Hotels Group may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.