Bob Iger became the CEO of The Walt Disney Company (NYSE:DIS) in 2005. This analysis aims first to contrast CEO compensation with other large companies. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Bob Iger's Compensation Compare With Similar Sized Companies?
According to our data, The Walt Disney Company has a market capitalization of US$261b, and paid its CEO total annual compensation worth US$66m over the year to September 2018. While we always look at total compensation first, we note that the salary component is less, at US$2.9m. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. We took a group of companies with market capitalizations over US$8.0b, and calculated the median CEO total compensation to be US$11m. There aren't very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.
As you can see, Bob Iger is paid more than the median CEO pay at large companies, in the same market. However, this does not necessarily mean The Walt Disney Company is paying too much. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
The graphic below shows how CEO compensation at Walt Disney has changed from year to year.
Is The Walt Disney Company Growing?
The Walt Disney Company has increased its earnings per share (EPS) by an average of 12% a year, over the last three years (using a line of best fit). Its revenue is up 17% over last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. Shareholders might be interested in this free visualization of analyst forecasts.
Has The Walt Disney Company Been A Good Investment?
I think that the total shareholder return of 42%, over three years, would leave most The Walt Disney Company shareholders smiling. 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.
We compared the total CEO remuneration paid by The Walt Disney Company, and compared it to remuneration at a group of other large companies. As discussed above, we discovered that the company pays more than the median of that group.
However we must not forget that the EPS growth has been very strong over three years. On top of that, in the same period, returns to shareholders have been great. As a result of this good performance, the CEO remuneration may well be quite reasonable. Whatever your view on compensation, you might want to check if insiders are buying or selling Walt Disney shares (free trial).
Important note: Walt Disney may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
If you spot an error that warrants correction, please contact the editor at email@example.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.
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