Here's Why Shareholders May Want To Be Cautious With Increasing WESCO International, Inc.'s (NYSE:WCC) CEO Pay Packet
Performance at WESCO International, Inc. (NYSE:WCC) has been reasonably good and CEO John Engel has done a decent job of steering the company in the right direction. This is something shareholders will keep in mind as they cast their votes on company resolutions such as executive remuneration in the upcoming AGM on 27 May 2021. However, some shareholders may still be hesitant of being overly generous with CEO compensation.
Check out our latest analysis for WESCO International
How Does Total Compensation For John Engel Compare With Other Companies In The Industry?
According to our data, WESCO International, Inc. has a market capitalization of US$5.2b, and paid its CEO total annual compensation worth US$11m over the year to December 2020. That's a notable increase of 70% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$947k.
For comparison, other companies in the same industry with market capitalizations ranging between US$4.0b and US$12b had a median total CEO compensation of US$5.9m. This suggests that John Engel is paid more than the median for the industry. Moreover, John Engel also holds US$19m worth of WESCO International stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Component | 2020 | 2019 | Proportion (2020) |
Salary | US$947k | US$1.0m | 8% |
Other | US$10m | US$5.6m | 92% |
Total Compensation | US$11m | US$6.6m | 100% |
On an industry level, around 24% of total compensation represents salary and 76% is other remuneration. WESCO International pays a modest slice of remuneration through salary, as compared 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.
WESCO International, Inc.'s Growth
Over the last three years, WESCO International, Inc. has shrunk its earnings per share by 22% per year. It achieved revenue growth of 72% over the last year.
The decrease in EPS could be a concern for some investors. But in contrast the revenue growth is strong, suggesting future potential for EPS growth. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. 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 WESCO International, Inc. Been A Good Investment?
Most shareholders would probably be pleased with WESCO International, Inc. for providing a total return of 76% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
In Summary...
The overall company performance has been commendable, however there are still areas for improvement. We still think that some shareholders will be hesitant of increasing CEO pay until EPS growth improves, since they are already paid higher than the industry.
CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 6 warning signs for WESCO International you should be aware of, and 1 of them is a bit unpleasant.
Important note: WESCO International 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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