Doug McMillon has been the CEO of Walmart Inc. (NYSE:WMT) since 2014. This analysis aims first to contrast CEO compensation with other large companies. Then we'll look at a snap shot of the business growth. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Doug McMillon's Compensation Compare With Similar Sized Companies?
According to our data, Walmart Inc. has a market capitalization of US$334b, and paid its CEO total annual compensation worth US$24m over the year to January 2019. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$1.3m. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. We took a group of companies with market capitalizations over US$8.0b, and calculated the median CEO total compensation to be US$11m. Once you start looking at very large companies, you need to take a broader range, because there simply aren't that many of them.
Thus we can conclude that Doug McMillon receives more in total compensation than the median of a group of large companies in the same market as Walmart Inc.. However, this doesn't necessarily mean the pay is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
The graphic below shows how CEO compensation at Walmart has changed from year to year.
Is Walmart Inc. Growing?
Walmart Inc. has reduced its earnings per share by an average of 20% a year, over the last three years (measured with a line of best fit). It achieved revenue growth of 1.5% over the last year.
Few shareholders would be pleased to read that earnings per share are lower over three years. The fairly low revenue growth fails to impress given that the earnings per share is down. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. You might want to check this free visual report on analyst forecasts for future earnings.
Has Walmart Inc. Been A Good Investment?
Most shareholders would probably be pleased with Walmart Inc. for providing a total return of 81% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
We examined the amount Walmart Inc. pays its CEO, and compared it to the amount paid by other large companies. We found that it pays well over the median amount paid in the benchmark group.
We think many shareholders would be underwhelmed with the business growth over the last three years. But clearly there are some positives, because investors have done well over the same time frame. So on this analysis we'd stop short of criticizing the level of CEO compensation. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Walmart (free visualization of insider trades).
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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