In 1988, Bill McMorrow was appointed CEO of Kennedy-Wilson Holdings, Inc. (NYSE:KW). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we’ll consider growth that the business demonstrates. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.
How Does Bill McMorrow’s Compensation Compare With Similar Sized Companies?
According to our data, Kennedy-Wilson Holdings, Inc. has a market capitalization of US$1.9b, and paid its CEO total annual compensation worth US$16m over the year to December 2019. Notably, that’s an increase of 21% over the year before. We think total compensation is more important but we note that the CEO salary is lower, at US$1.5m. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$1.0b to US$3.2b. The median total CEO compensation was US$5.0m.
Pay mix tells us a lot about how a company functions versus the wider industry, and it’s no different in the case of Kennedy-Wilson Holdings. Talking in terms of the sector, salary represented approximately 32% of total compensation out of all the companies we analysed, while other remuneration made up 68% of the pie. Kennedy-Wilson Holdings sets aside a smaller share of compensation for salary, in comparison to the overall industry.
It would therefore appear that Kennedy-Wilson Holdings, Inc. pays Bill McMorrow more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn’t mean the remuneration is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous. You can see a visual representation of the CEO compensation at Kennedy-Wilson Holdings, below.
Is Kennedy-Wilson Holdings, Inc. Growing?
Over the last three years Kennedy-Wilson Holdings, Inc. has seen earnings per share (EPS) move in a positive direction by an average of 44% per year (using a line of best fit). Its revenue is down 18% over last year.
This demonstrates that the company has been improving recently. A good result. The lack of revenue growth isn’t ideal, but it is the bottom line that counts most in business. You might want to check this free visual report on analyst forecasts for future earnings.
Has Kennedy-Wilson Holdings, Inc. Been A Good Investment?
Given the total loss of 25% over three years, many shareholders in Kennedy-Wilson Holdings, Inc. are probably rather dissatisfied, to say the least. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.
We compared the total CEO remuneration paid by Kennedy-Wilson Holdings, Inc., and compared it to remuneration at a group of similar sized companies. Our data suggests that it pays above the median CEO pay within that group.
Importantly, though, the company has impressed with its earnings per share growth, over three years. Having said that, shareholders may be disappointed with the weak returns over the last three years. This contrasts with the growth in CEO remuneration, in the last year. While EPS is moving in the right direction, we’d say shareholders would want better returns before the CEO is paid much more. Taking a breather from CEO compensation, we’ve spotted 5 warning signs for Kennedy-Wilson Holdings (of which 2 are a bit concerning!) you should know about in order to have a holistic understanding of the stock.
If you want to buy a stock that is better than Kennedy-Wilson Holdings, this free list of high return, low debt companies is a great place to look.
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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. 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. Thank you for reading.