In 2015 Leo Quinn was appointed CEO of Balfour Beatty plc (LON:BBY). First, this article will compare CEO compensation with compensation at similar sized companies. Then we'll look at a snap shot of the business growth. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Leo Quinn's Compensation Compare With Similar Sized Companies?
According to our data, Balfour Beatty plc has a market capitalization of UK£1.5b, and paid its CEO total annual compensation worth UK£4.3m over the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at UK£800k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of UK£773m to UK£2.5b. The median total CEO compensation was UK£1.4m.
Thus we can conclude that Leo Quinn receives more in total compensation than the median of a group of companies in the same market, and of similar size to Balfour Beatty plc. 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, below, how CEO compensation at Balfour Beatty has changed over time.
Is Balfour Beatty plc Growing?
Balfour Beatty plc has increased its earnings per share (EPS) by an average of 71% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 3.3%.
This demonstrates that the company has been improving recently. A good result. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. You might want to check this free visual report on analyst forecasts for future earnings.
Has Balfour Beatty plc Been A Good Investment?
With a three year total loss of 17%, Balfour Beatty plc would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
We compared the total CEO remuneration paid by Balfour Beatty plc, and compared it to remuneration at a group of similar sized companies. Our data suggests that it pays above the median CEO pay within that group.
However, the earnings per share growth over three years is certainly impressive. Having said that, shareholders may be disappointed with the weak returns over the last three years. Considering the per share profit growth, but keeping in mind the weak returns, we'd need more time to form a view on CEO compensation. CEO compensation is an important area to keep your eyes on, but we've also identified 4 warning signs for Balfour Beatty (1 can't be ignored!) that you should be aware of before investing here.
If you want to buy a stock that is better than Balfour Beatty, this free list of high return, low debt companies is a great place to look.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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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