Mark Kowlzan has been the CEO of Packaging Corporation of America (NYSE:PKG) since 2010, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Packaging Corporation of America.
Comparing Packaging Corporation of America's CEO Compensation With the industry
According to our data, Packaging Corporation of America has a market capitalization of US$13b, and paid its CEO total annual compensation worth US$10m over the year to December 2019. That is, the compensation was roughly the same as last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.3m.
In comparison with other companies in the industry with market capitalizations over US$8.0b , the reported median total CEO compensation was US$11m. So it looks like Packaging Corporation of America compensates Mark Kowlzan in line with the median for the industry. Furthermore, Mark Kowlzan directly owns US$55m worth of shares in the company, implying that they are deeply invested in the company's success.
On an industry level, around 13% of total compensation represents salary and 87% is other remuneration. Although there is a difference in how total compensation is set, Packaging Corporation of America more or less reflects the market in terms of setting the salary. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
Packaging Corporation of America's Growth
Packaging Corporation of America has reduced its earnings per share by 2.6% a year over the last three years. It saw its revenue drop 4.7% over the last year.
The lack of EPS growth is certainly unimpressive. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Packaging Corporation of America Been A Good Investment?
Packaging Corporation of America has generated a total shareholder return of 22% over three years, so most shareholders would be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.
As previously discussed, Mark is compensated close to the median for companies of its size, and which belong to the same industry. Packaging Corporation of America has had a tough time in recent years, with declining EPS growth, and although shareholder returns are stable, they are hardly worth celebrating. This doesn't compare well with CEO compensation, which is largely in line with the industry median. We would stop short of the compensation is inappropriate, but we can't say the executive is underpaid.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 3 warning signs for Packaging Corporation of America that investors should be aware of in a dynamic business environment.
Switching gears from Packaging Corporation of America, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
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