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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. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Robert Thomson's Compensation Compare With Similar Sized Companies?
At the time of writing our data says that News Corporation has a market cap of US$7.2b, and is paying total annual CEO compensation of US$13m. (This is based on the year to June 2018). We think total compensation is more important but we note that the CEO salary is lower, at US$2.0m. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$4.0b to US$12b. The median total CEO compensation was US$6.9m.
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.
The graphic below shows how CEO compensation at News has changed from year to year.
Is News Corporation Growing?
News Corporation has reduced its earnings per share by an average of 68% a year, over the last three years (measured with a line of best fit). It achieved revenue growth of 22% over the last year.
Unfortunately, earnings per share have trended lower over the last three years. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for me to put aside my concerns around earnings. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Shareholders might be interested in this free visualization of analyst forecasts.
Has News Corporation Been A Good Investment?
News Corporation has generated a total shareholder return of 11% over three years, so most shareholders would be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
We compared total CEO remuneration at News Corporation with the amount paid at companies with a similar market capitalization. Our data suggests that it pays above the median CEO pay within that group.
Earnings per share have not grown in three years, and the revenue growth fails to impress us.
While shareholder returns are acceptable, they don't delight. So you may want to delve deeper, because we don't think the CEO pay is too low. Shareholders may want to check for free if News insiders are buying or selling shares.
If you want to buy a stock that is better than News, this free list of high return, low debt companies is a great place to look.
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.