Is Babcock International Group PLC's (LON:BAB) CEO Paid At A Competitive Rate?
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Archie Bethel has been the CEO of Babcock International Group PLC (LON:BAB) since 2016. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we'll consider growth that the business demonstrates. 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.
Check out our latest analysis for Babcock International Group
How Does Archie Bethel's Compensation Compare With Similar Sized Companies?
Our data indicates that Babcock International Group PLC is worth UK£2.4b, and total annual CEO compensation is UK£2.0m. (This is based on the year to March 2019). That's below the compensation, last year. We think total compensation is more important but we note that the CEO salary is lower, at UK£780k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of UK£1.6b to UK£5.1b. The median total CEO compensation was UK£1.9m.
That means Archie Bethel receives fairly typical remuneration for the CEO of a company that size. This doesn't tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context.
The graphic below shows how CEO compensation at Babcock International Group has changed from year to year.
Is Babcock International Group PLC Growing?
On average over the last three years, Babcock International Group PLC has shrunk earnings per share by 8.9% each year (measured with a line of best fit). In the last year, its revenue is down -4.0%.
Sadly for shareholders, earnings per share are actually down, over three years. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. You might want to check this free visual report on analyst forecasts for future earnings.
Has Babcock International Group PLC Been A Good Investment?
With a three year total loss of 44%, Babcock International Group PLC would certainly have some dissatisfied shareholders. So shareholders would probably think the company shouldn't be too generous with CEO compensation.
In Summary...
Archie Bethel is paid around the same as most CEOs of similar size companies.
After looking at EPS and total shareholder returns, it's certainly hard to argue the company has performed well, since both metrics are down. Most would consider it prudent for the company to hold off any CEO pay rise until performance improves. Whatever your view on compensation, you might want to check if insiders are buying or selling Babcock International Group shares (free trial).
Important note: Babcock International Group 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.
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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. Thank you for reading.
