In 2014 Stuart J. Bradie was appointed CEO of KBR, Inc. (NYSE:KBR). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Stuart J. Bradie’s Compensation Compare With Similar Sized Companies?
Our data indicates that KBR, Inc. is worth US$3.6b, and total annual CEO compensation was reported as US$9.6m for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$1.0m. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. When we examined a selection of companies with market caps ranging from US$2.0b to US$6.4b, we found the median CEO total compensation was US$5.1m.
Thus we can conclude that Stuart J. Bradie receives more in total compensation than the median of a group of companies in the same market, and of similar size to KBR, Inc.. However, this doesn’t necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.
You can see a visual representation of the CEO compensation at KBR, below.
Is KBR, Inc. Growing?
KBR, Inc. has increased its earnings per share (EPS) by an average of 48% a year, over the last three years (using a line of best fit). Its revenue is up 26% over last year.
This demonstrates that the company has been improving recently. A good result. The combination of strong revenue growth with medium-term earnings per share improvement certainly points to the kind of growth I like to see. Shareholders might be interested in this free visualization of analyst forecasts.
Has KBR, Inc. Been A Good Investment?
Most shareholders would probably be pleased with KBR, Inc. for providing a total return of 78% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
We compared total CEO remuneration at KBR, Inc. with the amount paid at companies with a similar market capitalization. We found that it pays well over the median amount paid in the benchmark group.
However, the earnings per share growth over three years is certainly impressive. Even better, returns to shareholders have been plentiful, over the same time period. Considering this fine result for shareholders, we daresay the CEO compensation might be apt. So you may want to check if insiders are buying KBR shares with their own money (free access).
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.
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