What Can We Learn About Alexander & Baldwin's (NYSE:ALEX) CEO Compensation?

By
Simply Wall St
Published
July 31, 2020
NYSE:ALEX

This article will reflect on the compensation paid to Chris Benjamin who has served as CEO of Alexander & Baldwin, Inc. (NYSE:ALEX) since 2016. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Alexander & Baldwin.

Check out our latest analysis for Alexander & Baldwin

Comparing Alexander & Baldwin, Inc.'s CEO Compensation With the industry

At the time of writing, our data shows that Alexander & Baldwin, Inc. has a market capitalization of US$863m, and reported total annual CEO compensation of US$3.9m for the year to December 2019. We note that's an increase of 12% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$685k.

On examining similar-sized companies in the industry with market capitalizations between US$400m and US$1.6b, we discovered that the median CEO total compensation of that group was US$3.9m. This suggests that Alexander & Baldwin remunerates its CEO largely in line with the industry average. What's more, Chris Benjamin holds US$3.4m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component20192018Proportion (2019)
Salary US$685k US$665k 18%
Other US$3.2m US$2.8m 82%
Total CompensationUS$3.9m US$3.5m100%

On an industry level, around 15% of total compensation represents salary and 85% is other remuneration. Alexander & Baldwin pays out 18% of remuneration in the form of a salary, significantly higher than the industry average. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

ceo-compensation
NYSE:ALEX CEO Compensation July 31st 2020

A Look at Alexander & Baldwin, Inc.'s Growth Numbers

Alexander & Baldwin, Inc. has reduced its earnings per share by 64% a year over the last three years. Its revenue is down 41% over the previous year.

Overall this is not a very positive result for shareholders. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Alexander & Baldwin, Inc. Been A Good Investment?

Since shareholders would have lost about 55% over three years, some Alexander & Baldwin, Inc. investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

As we touched on above, Alexander & Baldwin, Inc. is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Meanwhile, earnings growth and shareholder returns have been in the red for the last three years. We'd stop short of saying compensation is inappropriate, but we would understand if shareholders had questions regarding a future raise.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 2 warning signs for Alexander & Baldwin (of which 1 is potentially serious!) that you should know about in order to have a holistic understanding of the stock.

Switching gears from Alexander & Baldwin, 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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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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