Does LendLease Group’s (ASX:LLC) CEO Pay Matter?
In 2008 Steve McCann was appointed CEO of LendLease Group (ASX:LLC). 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. This method should give us information to assess how appropriately the company pays the CEO.
Check out our latest analysis for LendLease Group
How Does Steve McCann’s Compensation Compare With Similar Sized Companies?
At the time of writing our data says that LendLease Group has a market cap of AU$6.5b, and is paying total annual CEO compensation of AU$6.4m. (This is based on the year to 2018). That’s below the compensation, last year. While we always look at total compensation first, we note that the salary component is less, at AU$2.0m. We looked at a group of companies with market capitalizations from AU$2.8b to AU$8.9b, and the median CEO compensation was AU$3.8m.
It would therefore appear that LendLease Group pays Steve McCann 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 LendLease Group has changed from year to year.
Is LendLease Group Growing?
Over the last three years LendLease Group has grown its earnings per share (EPS) by an average of 6.7% per year. Revenue was pretty flat on last year.
I would argue that the lack of revenue growth in the last year is less than ideal, but the improvement in EPS is good. In conclusion we can’t form a strong opinion about business performance yet; but it’s one worth watching.
It could be important to check this free visual depiction of what analysts expect for the future.
Has LendLease Group Been A Good Investment?
Given the total loss of 3.2% over three years, many shareholders in LendLease Group are probably rather dissatisfied, to say the least. It therefore might be upsetting for shareholders if the CEO were paid generously.
In Summary…
We compared the total CEO remuneration paid by LendLease Group, and compared it to remuneration at a group of similar sized companies. Our data suggests that it pays above the median CEO pay within that group.
The growth in the business has been uninspiring, but the shareholder returns have arguably been worse, over the last three years. Shareholders may wish to consider further research. Although we don’t think the CEO pay is too high, it is probably more on the generous side of things. Shareholders may want to check for free if LendLease Group insiders are buying or selling shares.
Of course, the past can be informative so you might be interested in considering this analytical visualization showing the company history of earnings and revenue.
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.
