Should You Worry About Brickworks Limited’s (ASX:BKW) CEO Salary Level?

Lindsay Partridge is the CEO of Brickworks Limited (ASX:BKW). First, this article will compare CEO compensation with compensation at similar sized companies. Then we’ll look at a snap shot of the business growth. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.

See our latest analysis for Brickworks

How Does Lindsay Partridge’s Compensation Compare With Similar Sized Companies?

Our data indicates that Brickworks Limited is worth AU$2.6b, and total annual CEO compensation is AU$3.3m. (This number is for the twelve months until July 2018). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at AU$1.5m. We looked at a group of companies with market capitalizations from AU$1.4b to AU$4.6b, and the median CEO total compensation was AU$2.4m.

It would therefore appear that Brickworks Limited pays Lindsay Partridge 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.

The graphic below shows how CEO compensation at Brickworks has changed from year to year.

ASX:BKW CEO Compensation, July 25th 2019
ASX:BKW CEO Compensation, July 25th 2019

Is Brickworks Limited Growing?

Over the last three years Brickworks Limited has grown its earnings per share (EPS) by an average of 29% per year (using a line of best fit). It achieved revenue growth of 12% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It’s also good to see decent revenue growth in the last year, suggesting the business is healthy and growing.

Has Brickworks Limited Been A Good Investment?

With a total shareholder return of 27% over three years, Brickworks Limited shareholders would, in general, be reasonably content. But they probably don’t want to see the CEO paid more than is normal for companies around the same size.

In Summary…

We compared total CEO remuneration at Brickworks Limited with the amount paid at companies with a similar market capitalization. Our data suggests that it pays above the median CEO pay within that group.

However we must not forget that the EPS growth has been very strong over three years. We also think investors are doing ok, over the same time period. So, considering the EPS growth we do not wish to criticize the level of CEO compensation, though we’d recommend further research on management. Shareholders may want to check for free if Brickworks insiders are buying or selling shares.

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.

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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Thank you for reading.