Murray Armstrong became the CEO of The Williams Companies, Inc. (NYSE:WMB) in 2011, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Williams Companies.
How Does Total Compensation For Murray Armstrong Compare With Other Companies In The Industry?
According to our data, The Williams Companies, Inc. has a market capitalization of US$23b, and paid its CEO total annual compensation worth US$16m over the year to December 2019. Notably, that's an increase of 46% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.2m.
For comparison, other companies in the industry with market capitalizations above US$8.0b, reported a median total CEO compensation of US$15m. From this we gather that Murray Armstrong is paid around the median for CEOs in the industry. Moreover, Murray Armstrong also holds US$16m worth of Williams Companies stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
On an industry level, roughly 19% of total compensation represents salary and 81% is other remuneration. Williams Companies 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.
A Look at The Williams Companies, Inc.'s Growth Numbers
The Williams Companies, Inc. has seen its earnings per share (EPS) increase by 89% a year over the past three years. Its revenue is down 6.8% over the previous year.
This demonstrates that the company has been improving recently and is good news for the shareholders. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has The Williams Companies, Inc. Been A Good Investment?
Since shareholders would have lost about 28% over three years, some The Williams Companies, Inc. investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
As previously discussed, Murray is compensated close to the median for companies of its size, and which belong to the same industry. Meanwhile, shareholder returns paint a sorry picture for the company, finishing in the red over the last three years. But earnings growth is moving in a favorable direction, certainly a positive sign. Considering positive earnings growth, we'd say compensation is fair, but shareholders may be wary of a bump in pay before the company logs positive returns.
CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 3 warning signs for Williams Companies you should be aware of, and 2 of them are concerning.
Important note: Williams Companies 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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