David Thomas became the CEO of Barratt Developments PLC (LON:BDEV) in 2015. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. Next, we'll consider growth that the business demonstrates. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.
How Does David Thomas's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Barratt Developments PLC has a market cap of UK£7.5b, and reported total annual CEO compensation of UK£3.6m for the year to June 2019. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at UK£739k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. We took a group of companies with market capitalizations over UK£6.1b, and calculated the median CEO total compensation to be UK£3.5m. Once you start looking at very large companies, you need to take a broader range, because there simply aren't that many of them.
So David Thomas receives a similar amount to the median CEO pay, amongst the companies we looked at. Although this fact alone doesn't tell us a great deal, it becomes more relevant when considered against the business performance.
You can see a visual representation of the CEO compensation at Barratt Developments, below.
Is Barratt Developments PLC Growing?
Over the last three years Barratt Developments PLC has grown its earnings per share (EPS) by an average of 10% per year (using a line of best fit). It saw its revenue drop 2.3% over the last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. While it would be good to see revenue growth, profits matter more in the end. Shareholders might be interested in this free visualization of analyst forecasts.
Has Barratt Developments PLC Been A Good Investment?
I think that the total shareholder return of 89%, over three years, would leave most Barratt Developments PLC shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.
Remuneration for David Thomas is close enough to the median pay for a CEO of a large company .
Few would be critical of the leadership, since returns have been juicy and earnings per share are moving in the right direction. Although the pay is a normal amount, some shareholders probably consider it fair or modest, given the good performance of the stock. Whatever your view on compensation, you might want to check if insiders are buying or selling Barratt Developments shares (free trial).
Important note: Barratt Developments may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned.
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