Most Shareholders Will Probably Find That The Compensation For Boyd Gaming Corporation's (NYSE:BYD) CEO Is Reasonable
Performance at Boyd Gaming Corporation (NYSE:BYD) has been rather uninspiring recently and shareholders may be wondering how CEO Keith Smith plans to fix this. They will get a chance to exercise their voting power to influence the future direction of the company in the next AGM on 06 May 2021. Setting appropriate executive remuneration to align with the interests of shareholders may also be a way to influence the company performance in the long run. In our opinion, CEO compensation does not look excessive and we discuss why.
Check out our latest analysis for Boyd Gaming
Comparing Boyd Gaming Corporation's CEO Compensation With the industry
At the time of writing, our data shows that Boyd Gaming Corporation has a market capitalization of US$7.7b, and reported total annual CEO compensation of US$3.0m for the year to December 2020. We note that's a decrease of 69% compared to last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.2m.
On examining similar-sized companies in the industry with market capitalizations between US$4.0b and US$12b, we discovered that the median CEO total compensation of that group was US$6.4m. That is to say, Keith Smith is paid under the industry median. Furthermore, Keith Smith directly owns US$68m worth of shares in the company, implying that they are deeply invested in the company's success.
Component | 2020 | 2019 | Proportion (2020) |
Salary | US$1.2m | US$1.4m | 40% |
Other | US$1.8m | US$8.2m | 60% |
Total Compensation | US$3.0m | US$9.6m | 100% |
Talking in terms of the industry, salary represented approximately 23% of total compensation out of all the companies we analyzed, while other remuneration made up 77% of the pie. Boyd Gaming pays out 40% of remuneration in the form of a salary, significantly higher than the industry average. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
A Look at Boyd Gaming Corporation's Growth Numbers
Over the last three years, Boyd Gaming Corporation has shrunk its earnings per share by 13% per year. It saw its revenue drop 29% over the last year.
The decline in EPS is a bit concerning. 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. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Boyd Gaming Corporation Been A Good Investment?
We think that the total shareholder return of 102%, over three years, would leave most Boyd Gaming Corporation shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
To Conclude...
Although shareholders would be quite happy with the returns they have earned on their initial investment, earnings have failed to grow and this could mean these strong returns may not continue. These are are some concerns that shareholders may want to address the board when they revisit their investment thesis.
CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. In our study, we found 4 warning signs for Boyd Gaming you should be aware of, and 1 of them makes us a bit uncomfortable.
Important note: Boyd Gaming is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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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