This Is Why Packaging Corporation of America's (NYSE:PKG) CEO Compensation Looks Appropriate

Key Insights

• Packaging Corporation of America's Annual General Meeting to take place on 8th of May
• Total pay for CEO Mark Kowlzan includes US$1.43m salary
• Total compensation is similar to the industry average
• Packaging Corporation of America's EPS grew by 16% over the past three years while total shareholder return over the past three years was 26%

CEO Mark Kowlzan has done a decent job of delivering relatively good performance at Packaging Corporation of America (NYSE:PKG) recently. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 8th of May. We present our case of why we think CEO compensation looks fair.

Check out our latest analysis for Packaging Corporation of America

How Does Total Compensation For Mark Kowlzan Compare With Other Companies In The Industry?

According to our data, Packaging Corporation of America has a market capitalization of US$15b, and paid its CEO total annual compensation worth US$15m over the year to December 2023. We note that's an increase of 24% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.4m.

For comparison, other companies in the American Packaging industry with market capitalizations above US$8.0b, reported a median total CEO compensation of US$12m. So it looks like Packaging Corporation of America compensates Mark Kowlzan in line with the median for the industry. What's more, Mark Kowlzan holds US$89m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	US$1.4m	US$1.4m	9%
Other	US$14m	US$11m	91%
Total Compensation	US$15m	US$12m	100%

Speaking on an industry level, nearly 14% of total compensation represents salary, while the remainder of 86% is other remuneration. Packaging Corporation of America sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

Packaging Corporation of America's Growth

Over the past three years, Packaging Corporation of America has seen its earnings per share (EPS) grow by 16% per year. Its revenue is down 6.2% over the previous year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. 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 Packaging Corporation of America Been A Good Investment?

Packaging Corporation of America has generated a total shareholder return of 26% over three years, so most shareholders would be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

Given that the company's overall performance has been reasonable, the CEO remuneration policy might not be shareholders' central point of focus in the upcoming AGM. However, we still think that any proposed increase in CEO compensation will be examined closely to make sure the compensation is appropriate and linked to performance.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 2 warning signs for Packaging Corporation of America that investors should think about before committing capital to this stock.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.