Yahoo Finance Shareholders May Not Be So Generous With Black Hills Corporation's (NYSE:BKH) CEO Compensation And Here's Why
Key Insights
Black Hills' Annual General Meeting to take place on 23rd of April
CEO Linn Evans' total compensation includes salary of US$893.3k
The overall pay is comparable to the industry average
Over the past three years, Black Hills' EPS grew by 1.7% and over the past three years, the total loss to shareholders 18%
Shareholders of Black Hills Corporation (NYSE:BKH) will have been dismayed by the negative share price return over the last three years. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 23rd of April. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.
View our latest analysis for Black Hills
How Does Total Compensation For Linn Evans Compare With Other Companies In The Industry?
At the time of writing, our data shows that Black Hills Corporation has a market capitalization of US$3.5b, and reported total annual CEO compensation of US$5.6m for the year to December 2023. We note that's an increase of 26% above last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$893k.
For comparison, other companies in the American Integrated Utilities industry with market capitalizations ranging between US$2.0b and US$6.4b had a median total CEO compensation of US$4.4m. So it looks like Black Hills compensates Linn Evans in line with the median for the industry. Moreover, Linn Evans also holds US$7.8m worth of Black Hills stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Component | 2023 | 2022 | Proportion (2023) |
Salary | US$893k | US$854k | 16% |
Other | US$4.7m | US$3.6m | 84% |
Total Compensation | US$5.6m | US$4.5m | 100% |
On an industry level, around 13% of total compensation represents salary and 87% is other remuneration. Black Hills is paying a higher share of its remuneration through a salary in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
Black Hills Corporation's Growth
Black Hills Corporation's earnings per share (EPS) grew 1.7% per year over the last three years. It saw its revenue drop 8.6% over the last year.
We would argue that the lack of revenue growth in the last year is less than ideal, but the modest EPS growth gives us some relief. It's hard to reach a conclusion about business performance right now. This may be one to watch. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Black Hills Corporation Been A Good Investment?
With a three year total loss of 18% for the shareholders, Black Hills Corporation would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be less generous with CEO compensation.
To Conclude...
Shareholders have not seen their shares grow in value, rather they have seen their shares decline. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.
CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We did our research and identified 2 warning signs (and 1 which is concerning) in Black Hills we think you should know about.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
