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How Much Does Balfour Beatty's (LON:BBY) CEO Make?

Simply Wall St
·3 min read

This article will reflect on the compensation paid to Leo Quinn who has served as CEO of Balfour Beatty plc (LON:BBY) since 2015. This analysis will also assess whether Balfour Beatty pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for Balfour Beatty

How Does Total Compensation For Leo Quinn Compare With Other Companies In The Industry?

At the time of writing, our data shows that Balfour Beatty plc has a market capitalization of UK£1.8b, and reported total annual CEO compensation of UK£3.0m for the year to December 2019. Notably, that's a decrease of 33% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at UK£800k.

For comparison, other companies in the same industry with market capitalizations ranging between UK£759m and UK£2.4b had a median total CEO compensation of UK£1.5m. This suggests that Leo Quinn is paid more than the median for the industry. Furthermore, Leo Quinn directly owns UK£6.2m worth of shares in the company, implying that they are deeply invested in the company's success.

Component

2019

2018

Proportion (2019)

Salary

UK£800k

UK£800k

27%

Other

UK£2.2m

UK£3.6m

73%

Total Compensation

UK£3.0m

UK£4.4m

100%

On an industry level, around 63% of total compensation represents salary and 37% is other remuneration. In Balfour Beatty's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

ceo-compensation
ceo-compensation

A Look at Balfour Beatty plc's Growth Numbers

Over the past three years, Balfour Beatty plc has seen its earnings per share (EPS) grow by 65% per year. Its revenue is up 9.1% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's also good to see modest revenue growth, suggesting the underlying business is healthy. 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 Balfour Beatty plc Been A Good Investment?

With a total shareholder return of 1.4% over three years, Balfour Beatty plc has done okay by shareholders. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

In Summary...

As we noted earlier, Balfour Beatty pays its CEO higher than the norm for similar-sized companies belonging to the same industry. However, the EPS growth over three years is certainly impressive. We also think investor returns are steady over the same time period. So, considering the EPS growth we do not wish to criticize CEO compensation, though we'd recommend further research on management.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 1 warning sign for Balfour Beatty that investors should think about before committing capital to this stock.

Important note: Balfour Beatty 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.