Here's Why Shareholders Should Examine Kimball International, Inc.'s (NASDAQ:KBAL) CEO Compensation Package More Closely

Kimball International, Inc. (NASDAQ:KBAL) has not performed well recently and CEO Kristine Juster will probably need to up their game. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 26 October 2021. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. We present the case why we think CEO compensation is out of sync with company performance.

Check out our latest analysis for Kimball International

How Does Total Compensation For Kristine Juster Compare With Other Companies In The Industry?

Our data indicates that Kimball International, Inc. has a market capitalization of US$409m, and total annual CEO compensation was reported as US$1.7m for the year to June 2021. We note that's a decrease of 33% compared to last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$800k.

For comparison, other companies in the same industry with market capitalizations ranging between US$200m and US$800m had a median total CEO compensation of US$1.4m. So it looks like Kimball International compensates Kristine Juster in line with the median for the industry. Furthermore, Kristine Juster directly owns US$1.9m worth of shares in the company.

On an industry level, roughly 24% of total compensation represents salary and 76% is other remuneration. Kimball International pays out 48% of remuneration in the form of a salary, significantly higher than the industry average. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Kimball International, Inc.'s Growth Numbers

Over the last three years, Kimball International, Inc. has shrunk its earnings per share by 40% per year. In the last year, its revenue is down 22%.

Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Kimball International, Inc. Been A Good Investment?

Given the total shareholder loss of 26% over three years, many shareholders in Kimball International, Inc. are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 3 warning signs for Kimball International that investors should think about before committing capital to this stock.

Important note: Kimball International 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.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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