In 2015 Leo Quinn was appointed CEO of Balfour Beatty plc (LON:BBY). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. 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. This process should give us an idea about how appropriately the CEO is paid.
How Does Leo Quinn’s Compensation Compare With Similar Sized Companies?
At the time of writing our data says that Balfour Beatty plc has a market cap of UK£2.0b, and is paying total annual CEO compensation of UK£5.4m. (This figure is for the year to December 2017). While we always look at total compensation first, we note that the salary component is less, at UK£800k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of UK£1.5b to UK£4.8b. The median total CEO compensation was UK£1.7m.
Thus we can conclude that Leo Quinn receives more in total compensation than the median of a group of companies in the same market, and of similar size to Balfour Beatty plc. However, this doesn’t necessarily mean the pay 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 Balfour Beatty has changed from year to year.
Is Balfour Beatty plc Growing?
Over the last three years Balfour Beatty plc has grown its earnings per share (EPS) by an average of 133% per year (using a line of best fit). In the last year, its revenue is down -7.7%.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. While it would be good to see revenue growth, profits matter more in the end. It could be important to check this free visual depiction of what analysts expect for the future.
Has Balfour Beatty plc Been A Good Investment?
Balfour Beatty plc has generated a total shareholder return of 21% over three years, so most shareholders would be reasonably content. But they probably don’t want to see the CEO paid more than is normal for companies around the same size.
We examined the amount Balfour Beatty plc pays its CEO, and compared it to the amount paid by similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.
Importantly, though, the company has impressed with its earnings per share growth, over three years. We also think investors are doing ok, over the same time period. You might wish to research management further, but on this analysis, considering the EPS growth, we wouldn’t call the CEO pay problematic. Whatever your view on compensation, you might want to check if insiders are buying or selling Balfour Beatty shares (free trial).
If you want to buy a stock that is better than Balfour Beatty, this free list of high return, low debt companies is a great place to look.
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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.