Yahoo Finance Why We Think KBR, Inc.'s (NYSE:KBR) CEO Compensation Is Not Excessive At All
Key Insights
KBR's Annual General Meeting to take place on 15th of May
Salary of US$1.23m is part of CEO Stuart John Bradie's total remuneration
The overall pay is comparable to the industry average
KBR's EPS declined by 51% over the past three years while total shareholder return over the past three years was 70%
KBR, Inc. (NYSE:KBR) has exhibited strong share price growth in the past few years. However, its earnings growth has not kept up, suggesting that there may be something amiss. The upcoming AGM on 15th of May may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.
View our latest analysis for KBR
How Does Total Compensation For Stuart John Bradie Compare With Other Companies In The Industry?
At the time of writing, our data shows that KBR, Inc. has a market capitalization of US$9.0b, and reported total annual CEO compensation of US$13m for the year to December 2023. That is, the compensation was roughly the same as last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.2m.
For comparison, other companies in the American Professional Services industry with market capitalizations ranging between US$4.0b and US$12b had a median total CEO compensation of US$10m. From this we gather that Stuart John Bradie is paid around the median for CEOs in the industry. Furthermore, Stuart John Bradie directly owns US$45m worth of shares in the company, implying that they are deeply invested in the company's success.
Component | 2023 | 2022 | Proportion (2023) |
Salary | US$1.2m | US$1.2m | 10% |
Other | US$11m | US$11m | 90% |
Total Compensation | US$13m | US$13m | 100% |
Talking in terms of the industry, salary represented approximately 14% of total compensation out of all the companies we analyzed, while other remuneration made up 86% of the pie. KBR 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.
KBR, Inc.'s Growth
Over the last three years, KBR, Inc. has shrunk its earnings per share by 51% per year. In the last year, its revenue is up 7.9%.
The decline in EPS is a bit concerning. The fairly low revenue growth fails to impress given that the EPS is down. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has KBR, Inc. Been A Good Investment?
We think that the total shareholder return of 70%, over three years, would leave most KBR, Inc. shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
In Summary...
While the return to shareholders does look promising, it's hard to ignore the lack of earnings growth and this makes us question whether these strong returns will continue. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We've identified 1 warning sign for KBR that investors should be aware of in a dynamic business environment.
Important note: KBR is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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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.
