Should You Worry About Brickworks Limited's (ASX:BKW) CEO Salary Level?
The CEO of Brickworks Limited (ASX:BKW) is Lindsay Partridge. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. 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.
See our latest analysis for Brickworks
How Does Lindsay Partridge's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Brickworks Limited has a market cap of AU$3.1b, and reported total annual CEO compensation of AU$3.2m for the year to July 2019. That's less than last year. While we always look at total compensation first, we note that the salary component is less, at AU$1.5m. We examined companies with market caps from AU$1.5b to AU$4.7b, and discovered that the median CEO total compensation of that group was AU$2.0m.
It would therefore appear that Brickworks Limited pays Lindsay Partridge more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
The graphic below shows how CEO compensation at Brickworks has changed from year to year.
Is Brickworks Limited Growing?
Over the last three years Brickworks Limited has grown its earnings per share (EPS) by an average of 25% per year (using a line of best fit). Its revenue is up 17% over last year.
This demonstrates that the company has been improving recently. A good result. It's a real positive to see this sort of growth in a single year. That suggests a healthy and growing business. You might want to check this free visual report on analyst forecasts for future earnings.
Has Brickworks Limited Been A Good Investment?
Most shareholders would probably be pleased with Brickworks Limited for providing a total return of 75% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
In Summary...
We examined the amount Brickworks Limited pays its CEO, and compared it to the amount paid by similar sized companies. Our data suggests that it pays above the median CEO pay within that group.
However we must not forget that the EPS growth has been very strong over three years. In addition, shareholders have done well over the same time period. Considering this fine result for shareholders, we daresay the CEO compensation might be apt. Whatever your view on compensation, you might want to check if insiders are buying or selling Brickworks shares (free trial).
Important note: Brickworks 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 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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
