In 1997 John Wren was appointed CEO of Omnicom Group Inc. (NYSE:OMC). 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. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does John Wren's Compensation Compare With Similar Sized Companies?
According to our data, Omnicom Group Inc. has a market capitalization of US$17b, and paid its CEO total annual compensation worth US$24m over the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$1.0m. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. When we examined a group of companies with market caps over US$8.0b, we found that their median CEO total compensation was US$11m. There aren't very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.
Thus we can conclude that John Wren receives more in total compensation than the median of a group of large companies in the same market as Omnicom Group Inc.. However, this doesn't necessarily mean the pay is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
You can see, below, how CEO compensation at Omnicom Group has changed over time.
Is Omnicom Group Inc. Growing?
Over the last three years Omnicom Group Inc. has grown its earnings per share (EPS) by an average of 8.7% per year (using a line of best fit). It saw its revenue drop 3.1% over the last year.
I generally like to see a little revenue growth, but the improvement in EPS is good. It's hard to reach a conclusion about business performance right now. This may be one to watch. Shareholders might be interested in this free visualization of analyst forecasts.
Has Omnicom Group Inc. Been A Good Investment?
Omnicom Group Inc. has generated a total shareholder return of 2.4% over three years, so most shareholders wouldn't be too disappointed. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
We compared the total CEO remuneration paid by Omnicom Group Inc., 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.
We generally prefer to see stronger EPS growth, and we're not particularly impressed with the total shareholder return, over the last three years. So it's certainly hard to argue that the CEO is modestly paid, although we don't see the remuneration as an issue. So you may want to check if insiders are buying Omnicom Group shares with their own money (free access).
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity 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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