Is KB Home’s (NYSE:KBH) CEO Paid At A Competitive Rate?
In 2006 Jeff Mezger was appointed CEO of KB Home (NYSE:KBH). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. 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.
View our latest analysis for KB Home
How Does Jeff Mezger’s Compensation Compare With Similar Sized Companies?
Our data indicates that KB Home is worth US$1.8b, and total annual CEO compensation is US$9.9m. (This is based on the year to 2017). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$1.1m. When we examined a selection of companies with market caps ranging from US$1.0b to US$3.2b, we found the median CEO compensation was US$3.6m.
As you can see, Jeff Mezger is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean KB Home 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 KB Home has changed over time.
Is KB Home Growing?
On average over the last three years, KB Home has shrunk earnings per share by 45% each year. It achieved revenue growth of 11% over the last year.
Unfortunately, earnings per share have trended lower over the last three years. And while it’s good to see some good revenue growth recently, the growth isn’t really fast enough for me to put aside my concerns around earnings. It’s hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration.
It could be important to check this free visual depiction of what analysts expect for the future.
Has KB Home Been A Good Investment?
I think that the total shareholder return of 63%, over three years, would leave most KB Home 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 KB Home pays its CEO, and compared it to the amount paid by similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.
Neither earnings per share nor revenue have been growing sufficiently fast to impress us, over the last three years.
But clearly there are some positives, because investors have done well over the same time frame. Given this situation we doubt shareholders are particularly concerned about the CEO compensation. Shareholders may want to check for free if KB Home insiders are buying or selling shares.
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.
