In 2001 Jack Hockema was appointed CEO of Kaiser Aluminum Corporation (NASDAQ:KALU). 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 we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Jack Hockema’s Compensation Compare With Similar Sized Companies?
Our data indicates that Kaiser Aluminum Corporation is worth US$1.4b, and total annual CEO compensation is US$5.4m. (This is based on the year to December 2018). While we always look at total compensation first, we note that the salary component is less, at US$915k. We looked at a group of companies with market capitalizations from US$1.0b to US$3.2b, and the median CEO total compensation was US$4.1m.
As you can see, Jack Hockema is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Kaiser Aluminum Corporation is paying too much. 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 Kaiser Aluminum has changed from year to year.
Is Kaiser Aluminum Corporation Growing?
On average over the last three years, Kaiser Aluminum Corporation has shrunk earnings per share by 1.1% each year (measured with a line of best fit). In the last year, its revenue is up 4.3%.
In the last three years the company has failed to grow earnings per share. And the modest revenue growth over 12 months isn’t much comfort against the reduced earnings per share. These factors suggest that the business performance wouldn’t really justify a high pay packet for the CEO.
Has Kaiser Aluminum Corporation Been A Good Investment?
Kaiser Aluminum Corporation has not done too badly by shareholders, with a total return of 4.7%, over three years. But they probably don’t want to see the CEO paid more than is normal for companies around the same size.
We compared total CEO remuneration at Kaiser Aluminum Corporation 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.
Earnings per share have not grown in three years, and the revenue growth fails to impress us. And shareholder returns are decent but not great. So we doubt many shareholders would consider the CEO pay to be particularly modest! Whatever your view on compensation, you might want to check if insiders are buying or selling Kaiser Aluminum shares (free trial).
Important note: Kaiser Aluminum may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
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