Is Graham Holdings Company’s (NYSE:GHC) CEO Salary Justified?
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In 2015 Tim O’Shaughnessy was appointed CEO of Graham Holdings Company (NYSE:GHC). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.
Check out our latest analysis for Graham Holdings
How Does Tim O’Shaughnessy’s Compensation Compare With Similar Sized Companies?
At the time of writing our data says that Graham Holdings Company has a market cap of US$3.6b, and is paying total annual CEO compensation of US$1.4m. (This is based on the year to 2017). We think total compensation is more important but we note that the CEO salary is lower, at US$750k. We looked at a group of companies with market capitalizations from US$2.0b to US$6.4b, and the median CEO compensation was US$4.7m.
A first glance this seems like a real positive for shareholders, since Tim O’Shaughnessy is paid less than the average compensation paid by similar sized companies. Though positive, it’s important we delve into the performance of the actual business.
You can see a visual representation of the CEO compensation at Graham Holdings, below.
Is Graham Holdings Company Growing?
Over the last three years Graham Holdings Company has grown its earnings per share (EPS) by an average of 79% per year (using a line of best fit). In the last year, its revenue is up 5.4%.
This demonstrates that the company has been improving recently. A good result. It’s nice to see a little revenue growth, as this is consistent with healthy business conditions. Although we don’t have analyst forecasts, you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has Graham Holdings Company Been A Good Investment?
Most shareholders would probably be pleased with Graham Holdings Company for providing a total return of 36% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
In Summary…
It looks like Graham Holdings Company pays its CEO less than similar sized companies. Since the business is growing, many would argue this suggests the pay is modest. The pleasing shareholder returns are the cherry on top; you might even consider that Tim O’Shaughnessy deserves a raise!
It’s not often we see shareholders do so well, and yet the CEO is paid modestly. The cherry on top would be if company insiders are buying shares with their own money. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Graham Holdings.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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.
