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Mike Kane has been the CEO of Boral Limited (ASX:BLD) since 2012. 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. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Mike Kane’s Compensation Compare With Similar Sized Companies?
Our data indicates that Boral Limited is worth AU$6.3b, and total annual CEO compensation is AU$4.9m. (This number is for the twelve months until June 2018). While we always look at total compensation first, we note that the salary component is less, at AU$1.7m. When we examined a selection of companies with market caps ranging from AU$2.9b to AU$9.3b, we found the median CEO total compensation was AU$3.4m.
Thus we can conclude that Mike Kane receives more in total compensation than the median of a group of companies in the same market, and of similar size to Boral Limited. However, this doesn’t necessarily mean the pay is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
The graphic below shows how CEO compensation at Boral has changed from year to year.
Is Boral Limited Growing?
On average over the last three years, Boral Limited has grown earnings per share (EPS) by 4.9% each year (using a line of best fit). Its revenue is up 18% over last year.
I would argue that the modest growth in revenue is a notable positive. And the improvement in earnings per share is modest but respectable. So while we’d stop just short of calling this a top performer, but we think it is well worth watching. Shareholders might be interested in this free visualization of analyst forecasts.
Has Boral Limited Been A Good Investment?
Given the total loss of 2.1% over three years, many shareholders in Boral Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
We compared total CEO remuneration at Boral Limited with the amount paid at companies with a similar market capitalization. We found that it pays well over the median amount paid in the benchmark group.
While we have not been overly impressed by the business performance, the shareholder returns, over three years, have been disappointing. Shareholders may wish to consider further research. Although we don’t think the CEO pay is too high, it is probably more on the generous side of things. Shareholders may want to check for free if Boral 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.
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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. Thank you for reading.