U.S. Markets close in 4 hrs 28 mins

Is Boral Limited's (ASX:BLD) CEO Being Overpaid?

Simply Wall St

In 2012 Mike Kane was appointed CEO of Boral Limited (ASX:BLD). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. 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 Boral

How Does Mike Kane's Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Boral Limited has a market cap of AU$6.5b, and is paying total annual CEO compensation of AU$4.9m. (This figure is for the year to June 2018). While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at AU$1.7m. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of AU$2.8b to AU$9.1b. The median total CEO compensation was AU$3.4m.

As you can see, Mike Kane is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Boral Limited is paying too much. 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 Boral has changed over time.

ASX:BLD CEO Compensation, July 22nd 2019

Is Boral Limited Growing?

On average over the last three years, Boral Limited has grown earnings per share (EPS) by 4.9% each year (using a line of best fit). Its revenue is up 18% over last year.

This revenue growth could really point to a brighter future. And, while modest, the earnings per share growth is noticeable. Although we'll stop short of calling the stock a top performer, we think the company has potential. Shareholders might be interested in this free visualization of analyst forecasts.

Has Boral Limited Been A Good Investment?

With a three year total loss of 8.4%, Boral Limited would certainly have some dissatisfied shareholders. So shareholders would probably think the company shouldn't be too generous with CEO compensation.

In Summary...

We compared the total CEO remuneration paid by Boral Limited, and compared it to remuneration at a group of similar sized companies. We found that it pays well over the median amount paid in the benchmark group.

Over the last three years, shareholder returns have been downright disappointing, and the underlying business has failed to impress us. Considering this, we have the opinion that the CEO pay is more on the generous side, than the modest side. So you may want to check if insiders are buying Boral shares with their own money (free access).

Important note: Boral 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.

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.

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.