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This article will reflect on the compensation paid to Mark Kowlzan who has served as CEO of Packaging Corporation of America (NYSE:PKG) since 2010. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
How Does Total Compensation For Mark Kowlzan Compare With Other Companies In The Industry?
At the time of writing, our data shows that Packaging Corporation of America has a market capitalization of US$11b, and reported total annual CEO compensation of US$10m for the year to December 2019. That is, the compensation was roughly the same as last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.3m.
In comparison with other companies in the industry with market capitalizations over US$8.0b , the reported median total CEO compensation was US$12m. This suggests that Packaging Corporation of America remunerates its CEO largely in line with the industry average. Moreover, Mark Kowlzan also holds US$49m worth of Packaging Corporation of America stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Speaking on an industry level, nearly 13% of total compensation represents salary, while the remainder of 87% is other remuneration. Although there is a difference in how total compensation is set, Packaging Corporation of America more or less reflects the market in terms of setting the salary. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
Packaging Corporation of America's Growth
Packaging Corporation of America has reduced its earnings per share by 2.6% a year over the last three years. It saw its revenue drop 4.7% over the last year.
Its a bit disappointing to see that the company has failed to grow its EPS. 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. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Packaging Corporation of America Been A Good Investment?
Packaging Corporation of America has generated a total shareholder return of 16% over three years, so most shareholders would be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
As we noted earlier, Packaging Corporation of America pays its CEO in line with similar-sized companies belonging to the same industry. According to our analysis, Packaging Corporation of America is suffering from uninspiring EPS growth, and even though shareholder returns are stable, they are hardly impressive. These figures do not go well against CEO compensation, which is more or less equal to the industry median. We wouldn't go as far as saying CEO compensation is inappropriate, but we don't think the executive is underpaid.
CEO compensation can have a massive impact on performance, but it's just one element. We've identified 2 warning signs for Packaging Corporation of America that investors should be aware of in a dynamic business environment.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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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