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This article will reflect on the compensation paid to Lindsay Partridge who has served as CEO of Brickworks Limited (ASX:BKW) since 2000. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Brickworks.
Comparing Brickworks Limited's CEO Compensation With the industry
At the time of writing, our data shows that Brickworks Limited has a market capitalization of AU$3.1b, and reported total annual CEO compensation of AU$2.9m for the year to July 2020. We note that's a decrease of 12% compared to last year. Notably, the salary which is AU$1.54m, represents most of the total compensation being paid.
On examining similar-sized companies in the industry with market capitalizations between AU$1.4b and AU$4.4b, we discovered that the median CEO total compensation of that group was AU$1.8m. Accordingly, our analysis reveals that Brickworks Limited pays Lindsay Partridge north of the industry median. Moreover, Lindsay Partridge also holds AU$3.8m worth of Brickworks stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
On an industry level, around 54% of total compensation represents salary and 46% is other remuneration. Brickworks is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
Brickworks Limited's Growth
Over the past three years, Brickworks Limited has seen its earnings per share (EPS) grow by 19% per year. In the last year, its revenue is up 3.8%.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see modest revenue growth, suggesting the underlying business is healthy. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has Brickworks Limited Been A Good Investment?
Most shareholders would probably be pleased with Brickworks Limited for providing a total return of 60% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
As previously discussed, Lindsay is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. But EPS growth and shareholder returns have been top-notch for the past three years. As a result of the excellent all-round performance of the company, we believe CEO compensation is fair. And given most shareholders are probably very happy with recent returns, they might even think that Lindsay deserves a raise!
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We did our research and identified 2 warning signs (and 1 which doesn't sit too well with us) in Brickworks we think you should know about.
Switching gears from Brickworks, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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