Pat Ottensmeyer became the CEO of Kansas City Southern (NYSE:KSU) in 2016. First, this article will compare CEO compensation with compensation at other large companies. After that, we will consider the growth in the business. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.

See our latest analysis for Kansas City Southern

How Does Pat Ottensmeyer's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Kansas City Southern has a market cap of US$17b, and reported total annual CEO compensation of US$5.5m for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$895k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. When we examined a group of companies with market caps over US$8.0b, we found that their median CEO total compensation was US$11m. Once you start looking at very large companies, you need to take a broader range, because there simply aren't that many of them.

This would give shareholders a good impression of the company, since most large companies pay more, leaving less for shareholders. Though positive, it's important we delve into the performance of the actual business.

You can see a visual representation of the CEO compensation at Kansas City Southern, below.

Is Kansas City Southern Growing?

Over the last three years Kansas City Southern has grown its earnings per share (EPS) by an average of 3.2% per year (using a line of best fit). In the last year, its revenue is up 5.6%.

I would argue that the improvement in revenue isn't particularly impressive, but the modest improvement in EPS is good. It's clear the performance has been quite decent, but it it falls short of outstanding,based on this information. Shareholders might be interested in this free visualization of analyst forecasts.

Has Kansas City Southern Been A Good Investment?

Boasting a total shareholder return of 101% over three years, Kansas City Southern has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

It appears that Kansas City Southern remunerates its CEO below most large companies.

It's well worth noting that while Pat Ottensmeyer is paid below what is normal at large companies, the returns have been very pleasing, over the last three years. So, while it might be nice to have better EPS growth, on our analysis the CEO compensation is quite modest. So you may want to check if insiders are buying Kansas City Southern 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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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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