Robert Thomson became the CEO of News Corporation (NASDAQ:NWSA) in 2013. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we'll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Robert Thomson's Compensation Compare With Similar Sized Companies?
According to our data, News Corporation has a market capitalization of US$6.6b, and paid its CEO total annual compensation worth US$15m over the year to June 2019. While we always look at total compensation first, we note that the salary component is less, at US$3.0m. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. When we examined a selection of companies with market caps ranging from US$4.0b to US$12b, we found the median CEO total compensation was US$7.4m.
Pay mix tells us a lot about how a company functions versus the wider industry, and it's no different in the case of News. On a sector level, around 19% of total compensation represents salary and 81% is other remuneration. News is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation
As you can see, Robert Thomson is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean News Corporation is paying too much. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous. You can see a visual representation of the CEO compensation at News, below.
Is News Corporation Growing?
On average over the last three years, News Corporation has seen earnings per share (EPS) move in a favourable direction by 16% each year (using a line of best fit). It saw its revenue drop 7.3% over the last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. While it would be good to see revenue growth, profits matter more in the end. It could be important to check this free visual depiction of what analysts expect for the future.
Has News Corporation Been A Good Investment?
Given the total loss of 11% over three years, many shareholders in News Corporation are probably rather dissatisfied, to say the least. So shareholders would probably think the company shouldn't be too generous with CEO compensation.
We compared total CEO remuneration at News Corporation with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of that group.
Importantly, though, the company has impressed with its earnings per share growth, over three years. Having said that, shareholders may be disappointed with the weak returns over the last three years. Considering positive per-share earnings movement, but keeping in mind the weak returns, we'd need more time to form a view on CEO compensation. Looking into other areas, we've picked out 2 warning signs for News that investors should think about before committing capital to this stock.
Important note: News 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.
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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. Thank you for reading.