In 2014 Mike Clarke was appointed CEO of Treasury Wine Estates Limited (ASX:TWE). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we'll consider growth that the business demonstrates. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Mike Clarke's Compensation Compare With Similar Sized Companies?
According to our data, Treasury Wine Estates Limited has a market capitalization of AU$13b, and pays its CEO total annual compensation worth AU$11m. (This number is for the twelve months until June 2019). That's a modest increase of 2.3% on the prior year year. While we always look at total compensation first, we note that the salary component is less, at AU$2.6m. When we examined a selection of companies with market caps ranging from AU$5.8b to AU$17b, we found the median CEO total compensation was AU$4.1m.
Thus we can conclude that Mike Clarke receives more in total compensation than the median of a group of companies in the same market, and of similar size to Treasury Wine Estates Limited. However, this doesn't necessarily mean the pay is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
You can see a visual representation of the CEO compensation at Treasury Wine Estates, below.
Is Treasury Wine Estates Limited Growing?
On average over the last three years, Treasury Wine Estates Limited has grown earnings per share (EPS) by 26% each year (using a line of best fit). In the last year, its revenue is up 15%.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. Shareholders might be interested in this free visualization of analyst forecasts.
Has Treasury Wine Estates Limited Been A Good Investment?
Boasting a total shareholder return of 78% over three years, Treasury Wine Estates Limited has done well by shareholders. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.
We examined the amount Treasury Wine Estates Limited 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.
However, the earnings per share growth over three years is certainly impressive. In addition, shareholders have done well over the same time period. Considering this fine result for shareholders, we daresay the CEO compensation might be apt. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Treasury Wine Estates (free visualization of insider trades).
Important note: Treasury Wine Estates may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.