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Is T-Mobile US, Inc.'s (NASDAQ:TMUS) CEO Pay Justified?

Simply Wall St

John Legere became the CEO of T-Mobile US, Inc. (NASDAQ:TMUS) in 2013. This analysis aims first to contrast CEO compensation with other large companies. After that, we will consider the growth in the business. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.

Check out our latest analysis for T-Mobile US

How Does John Legere's Compensation Compare With Similar Sized Companies?

At the time of writing our data says that T-Mobile US, Inc. has a market cap of US$63b, and is paying total annual CEO compensation of US$24m. (This figure is for the year to December 2017). While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$1.6m. We looked at a group of companies with market capitalizations over US$8.0b and the 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.

As you can see, John Legere is paid more than the median CEO pay at large companies, in the same market. However, this does not necessarily mean T-Mobile US, Inc. is paying too much. 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 T-Mobile US, below.

NasdaqGS:TMUS CEO Compensation, April 22nd 2019

Is T-Mobile US, Inc. Growing?

Over the last three years T-Mobile US, Inc. has grown its earnings per share (EPS) by an average of 53% per year (using a line of best fit). It achieved revenue growth of 6.5% over the last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. It's also good to see modest revenue growth, suggesting the underlying business is healthy. You might want to check this free visual report on analyst forecasts for future earnings.

Has T-Mobile US, Inc. Been A Good Investment?

Most shareholders would probably be pleased with T-Mobile US, Inc. for providing a total return of 79% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary...

We compared the total CEO remuneration paid by T-Mobile US, Inc., and compared it to remuneration at a group of other large companies. Our data suggests that it pays above the median CEO pay within that group.

Importantly, though, the company has impressed with its earnings per share growth, over three years. Even better, returns to shareholders have been plentiful, over the same time period. As a result of this good performance, the CEO remuneration may well be quite reasonable. So you may want to check if insiders are buying T-Mobile US 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.

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 editorial-team@simplywallst.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.