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Andy Penn has been the CEO of Telstra Corporation Limited (ASX:TLS) since 2015. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. Next, we'll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Andy Penn's Compensation Compare With Similar Sized Companies?
At the time of writing our data says that Telstra Corporation Limited has a market cap of AU$45b, and is paying total annual CEO compensation of AU$4.5m. (This number is for the twelve months until June 2018). While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at AU$2.4m. We looked at a group of companies with market capitalizations over AU$11b and the median CEO total compensation was AU$5.1m. (We took a wide range because the CEOs of massive companies tend to be paid similar amounts - even though some are quite a bit bigger than others).
So Andy Penn is paid around the average of the companies we looked at. Although this fact alone doesn't tell us a great deal, it becomes more relevant when considered against the business performance.
The graphic below shows how CEO compensation at Telstra has changed from year to year.
Is Telstra Corporation Limited Growing?
Over the last three years Telstra Corporation Limited has shrunk its earnings per share by an average of 3.8% per year (measured with a line of best fit). In the last year, its revenue changed by just -0.9%.
Unfortunately, earnings per share have trended lower over the last three years. And the flat revenue is seriously uninspiring. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. You might want to check this free visual report on analyst forecasts for future earnings.
Has Telstra Corporation Limited Been A Good Investment?
With a three year total loss of 16%, Telstra Corporation Limited would certainly have some dissatisfied shareholders. So shareholders would probably think the company shouldn't be too generous with CEO compensation.
Andy Penn is paid around what is normal the leaders of larger companies.
Returns have been disappointing and the company is not growing its earnings per share. Most would consider it prudent for the company to hold off any CEO pay rise until performance improves. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Telstra (free visualization of insider trades).
Important note: Telstra 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.
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 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. Thank you for reading.