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Ted Carlson became the CEO of Telephone and Data Systems, Inc. (NYSE:TDS) in 1986, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Comparing Telephone and Data Systems, Inc.'s CEO Compensation With the industry
At the time of writing, our data shows that Telephone and Data Systems, Inc. has a market capitalization of US$2.6b, and reported total annual CEO compensation of US$6.9m for the year to December 2019. That's a fairly small increase of 4.7% over the previous year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.4m.
In comparison with other companies in the industry with market capitalizations ranging from US$2.0b to US$6.4b, the reported median CEO total compensation was US$2.3m. Accordingly, our analysis reveals that Telephone and Data Systems, Inc. pays Ted Carlson north of the industry median. Moreover, Ted Carlson also holds US$99m worth of Telephone and Data Systems stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Speaking on an industry level, nearly 22% of total compensation represents salary, while the remainder of 78% is other remuneration. It's interesting to note that Telephone and Data Systems allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
Telephone and Data Systems, Inc.'s Growth
Telephone and Data Systems, Inc. has seen its earnings per share (EPS) increase by 43% a year over the past three years. The trailing twelve months of revenue was pretty much the same as the prior period.
Shareholders would be glad to know that the company has improved itself over the last few years. It's also good to see modest revenue growth, suggesting the underlying business is healthy. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Telephone and Data Systems, Inc. Been A Good Investment?
Given the total shareholder loss of 13% over three years, many shareholders in Telephone and Data Systems, Inc. are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
As we noted earlier, Telephone and Data Systems pays its CEO higher than the norm for similar-sized companies belonging to the same industry. But the company has impressed with its earnings per share growth, but we cannot say the same about the uninspiring shareholder returns (over the last three years). Although we don't think the CEO pay is too high, considering negative investor returns, it is more generous than modest.
CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We did our research and identified 3 warning signs (and 2 which are concerning) in Telephone and Data Systems we think you should know about.
Switching gears from Telephone and Data Systems, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
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.
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