This article will reflect on the compensation paid to Keith Barr who has served as CEO of InterContinental Hotels Group PLC (LON:IHG) since 2017. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for InterContinental Hotels Group.
Comparing InterContinental Hotels Group PLC's CEO Compensation With the industry
According to our data, InterContinental Hotels Group PLC has a market capitalization of UK£8.7b, and paid its CEO total annual compensation worth UK£4.4m over the year to December 2019. That's a notable increase of 9.7% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at UK£1.1m.
On comparing similar companies in the industry with market capitalizations above UK£6.0b, we found that the median total CEO compensation was UK£3.0m. This suggests that Keith Barr is paid more than the median for the industry. Furthermore, Keith Barr directly owns UK£3.4m worth of shares in the company.
On an industry level, around 77% of total compensation represents salary and 23% is other remuneration. InterContinental Hotels Group sets aside a smaller share of compensation for salary, in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
InterContinental Hotels Group PLC's Growth
Over the last three years, InterContinental Hotels Group PLC has shrunk its earnings per share by 38% per year. In the last year, its revenue is down 21%.
Few shareholders would be pleased to read that EPS have declined. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has InterContinental Hotels Group PLC Been A Good Investment?
InterContinental Hotels Group PLC has served shareholders reasonably well, with a total return of 14% over three years. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
As previously discussed, Keith is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. Meanwhile, EPS has not been growing sufficiently to impress us, over the last three years. While shareholder returns are acceptable, they don't delight. So we think more research is needed, but we don't think the CEO is underpaid.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 1 warning sign for InterContinental Hotels Group that investors should think about before committing capital to this stock.
Important note: InterContinental Hotels Group is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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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.
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