In 2008 Alan Joyce was appointed CEO of Qantas Airways Limited (ASX:QAN). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we'll consider growth that the business demonstrates. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.
How Does Alan Joyce's Compensation Compare With Similar Sized Companies?
According to our data, Qantas Airways Limited has a market capitalization of AU$9.1b, and pays its CEO total annual compensation worth AU$7.7m. (This is based on the year to June 2018). While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at AU$2.1m. When we examined a selection of companies with market caps ranging from AU$5.9b to AU$18b, we found the median CEO total compensation was AU$4.1m.
It would therefore appear that Qantas Airways Limited pays Alan Joyce more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration 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 a visual representation of the CEO compensation at Qantas Airways, below.
Is Qantas Airways Limited Growing?
Qantas Airways Limited has increased its earnings per share (EPS) by an average of 6.6% a year, over the last three years (using a line of best fit). Its revenue is up 5.3% over last year.
I'd prefer higher revenue growth, but the modest improvement in EPS is good. It's clear the performance has been quite decent, but it it falls short of outstanding,based on this information. You might want to check this free visual report on analyst forecasts for future earnings.
Has Qantas Airways Limited Been A Good Investment?
Boasting a total shareholder return of 95% over three years, Qantas Airways Limited has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
We examined the amount Qantas Airways Limited pays its CEO, and compared it to the amount paid by similar sized companies. Our data suggests that it pays above the median CEO pay within that group.
While we generally prefer to see stronger EPS growth, there's no arguing with the strong returns to shareholders, over the last three years. As a result of the juicy return to investors, the CEO remuneration may well be quite reasonable. Whatever your view on compensation, you might want to check if insiders are buying or selling Qantas Airways shares (free trial).
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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