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Here's Why Shareholders Will Not Be Complaining About The Western Union Company's (NYSE:WU) CEO Pay Packet

It would be hard to discount the role that CEO Hikmet Ersek has played in delivering the impressive results at The Western Union Company (NYSE:WU) recently. Coming up to the next AGM on 14 May 2021, shareholders would be keeping this in mind. It is likely that the focus will be on company strategy going forward as shareholders hear from the board and cast their votes on resolutions such as executive remuneration and other matters. Here is our take on why we think CEO compensation is not extravagant.

See our latest analysis for Western Union

How Does Total Compensation For Hikmet Ersek Compare With Other Companies In The Industry?

According to our data, The Western Union Company has a market capitalization of US$10b, and paid its CEO total annual compensation worth US$10m over the year to December 2020. That is, the compensation was roughly the same as last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.0m.

In comparison with other companies in the industry with market capitalizations over US$8.0b , the reported median total CEO compensation was US$12m. This suggests that Western Union remunerates its CEO largely in line with the industry average. What's more, Hikmet Ersek holds US$27m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component

2020

2019

Proportion (2020)

Salary

US$1.0m

US$1.0m

10%

Other

US$9.3m

US$9.1m

90%

Total Compensation

US$10m

US$10m

100%

On an industry level, around 14% of total compensation represents salary and 86% is other remuneration. It's interesting to note that Western Union allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

ceo-compensation
ceo-compensation

A Look at The Western Union Company's Growth Numbers

The Western Union Company has seen its earnings per share (EPS) increase by 50% a year over the past three years. Its revenue is down 5.6% over the previous year.

Shareholders would be glad to know that the company has improved itself over the last few years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has The Western Union Company Been A Good Investment?

Boasting a total shareholder return of 41% over three years, The Western Union Company has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

Given the company's decent performance, the CEO remuneration policy might not be shareholders' central point of focus in the AGM. Instead, investors might be more interested in discussions that would help manage their longer-term growth expectations such as company business strategies and future growth potential.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 2 warning signs for Western Union that you should be aware of before investing.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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