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Jim Fish has been the CEO of Waste Management, Inc. (NYSE:WM) since 2016, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Comparing Waste Management, Inc.'s CEO Compensation With the industry
Our data indicates that Waste Management, Inc. has a market capitalization of US$51b, and total annual CEO compensation was reported as US$11m for the year to December 2019. We note that's an increase of 24% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.2m.
For comparison, other companies in the industry with market capitalizations above US$8.0b, reported a median total CEO compensation of US$9.0m. This suggests that Waste Management remunerates its CEO largely in line with the industry average. What's more, Jim Fish holds US$32m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Speaking on an industry level, nearly 23% of total compensation represents salary, while the remainder of 77% is other remuneration. Waste Management sets aside a smaller share of compensation for salary, in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
Waste Management, Inc.'s Growth
Over the past three years, Waste Management, Inc. has seen its earnings per share (EPS) grow by 4.3% per year. Its revenue is down 2.9% over the previous year.
We would argue that the lack of revenue growth in the last year is less than ideal, but it is good to see a modest EPS growth at least. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Waste Management, Inc. Been A Good Investment?
Most shareholders would probably be pleased with Waste Management, Inc. for providing a total return of 58% over three years. 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.
As we noted earlier, Waste Management pays its CEO in line with similar-sized companies belonging to the same industry. However, the company's EPS growth numbers over the last three years is not that impressive. Meanwhile, shareholder returns have remained positive over the same time frame. There is room for improved company performance, but we don't see the CEO compensation as a big issue here.
CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 2 warning signs for Waste Management that investors should look into moving forward.
Important note: Waste Management 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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