Is BP plc (LON:BP.) Overpaying Its CEO?
In 2010 Bob Dudley was appointed CEO of BP plc (LON:BP.). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. Then we’ll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.
View our latest analysis for BP
How Does Bob Dudley’s Compensation Compare With Similar Sized Companies?
Our data indicates that BP plc is worth UK£106.9b, and total annual CEO compensation is US$13m. That’s a notable increase of 13% on last year. When we examined a group of companies with market caps over US$8.0b, we found that their median CEO compensation was US$5m.
Thus we can conclude that Bob Dudley receives more in total compensation than the median of a group of large companies in the same market as BP plc. However, this doesn’t necessarily mean the pay 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.
You can see, below, how CEO compensation at BP has changed over time.
Is BP plc Growing?
BP plc has increased its earnings per share (EPS) by an average of 109% a year, over the last three years It achieved revenue growth of 29% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It’s great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly.
Shareholders might be interested in this free visualization of analyst forecasts. .
Has BP plc Been A Good Investment?
I think that the total shareholder return of 68%, over three years, would leave most BP plc shareholders smiling. This strong performance might mean some shareholders don’t mind if the CEO is paid more than is normal for a company of its size.
In Summary…
We examined the amount BP plc pays its CEO, and compared it to the amount paid by other large companies. As discussed above, we discovered that the company pays more than the median of 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. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at BP plc.
Or you might prefer gaze upon this detailed graph of past earnings, revenue and cash flow .
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
