Chris Benjamin became the CEO of Alexander & Baldwin, Inc. (NYSE:ALEX) in 2016, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the funds from operations and shareholder returns of the company.
How Does Total Compensation For Chris Benjamin Compare With Other Companies In The Industry?
Our data indicates that Alexander & Baldwin, Inc. has a market capitalization of US$938m, and total annual CEO compensation was reported as US$3.9m for the year to December 2019. Notably, that's an increase of 12% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at US$685k.
On comparing similar companies from the same industry with market caps ranging from US$400m to US$1.6b, we found that the median CEO total compensation was US$3.9m. So it looks like Alexander & Baldwin compensates Chris Benjamin in line with the median for the industry. Furthermore, Chris Benjamin directly owns US$3.7m worth of shares in the company, implying that they are deeply invested in the company's success.
Talking in terms of the industry, salary represented approximately 15% of total compensation out of all the companies we analyzed, while other remuneration made up 85% of the pie. Alexander & Baldwin is paying a higher share of its remuneration through a salary in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
Alexander & Baldwin, Inc.'s Growth
Funds from operations (FFO) reported by Alexander & Baldwin saw a substantial turnaround this year, rising from -US$15m last year to US$50m at the last update. It saw its revenue drop 45% over the last year.
A lack of improvement is not good to see. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Alexander & Baldwin, Inc. Been A Good Investment?
Given the total shareholder loss of 52% over three years, many shareholders in Alexander & Baldwin, Inc. are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
As we touched on above, Alexander & Baldwin, Inc. is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. On the other hand, growth and total shareholder return have been negative for the last three years. We'd stop short of saying compensation is inappropriate, but we would understand if shareholders had questions regarding a future raise.
We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 2 warning signs (and 1 which is a bit unpleasant) in Alexander & Baldwin we think you should know about.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.
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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