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Is Thomson Reuters Corporation’s (TSE:TRI) CEO Salary Justified?

Jim Smith became the CEO of Thomson Reuters Corporation (TSE:TRI) in 2012. First, this article will compare CEO compensation with compensation at other large companies. Then we’ll look at a snap shot of the business growth. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.

Check out our latest analysis for Thomson Reuters

How Does Jim Smith’s Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Thomson Reuters Corporation has a market cap of CA$33.9b, and is paying total annual CEO compensation of US$10m. That’s below the compensation, last year. When we examined a group of companies with market caps over US$8.0b, we found that their median CEO compensation was US$7m.

It would therefore appear that Thomson Reuters Corporation pays Jim Smith more than the median CEO remuneration at large companies, in the same market. However, this fact alone doesn’t mean the remuneration is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.

You can see, below, how CEO compensation at Thomson Reuters has changed over time.

TSX:TRI CEO Compensation November 6th 18

Is Thomson Reuters Corporation Growing?

Thomson Reuters Corporation has reduced its earnings per share by an average of 4.1% a year, over the last three years. Its revenue is up 39% over last year.

As investors, we do are a bit wary of companies that have lower earnings per share, over three years. But in contrast the revenue growth is strong, suggesting future potential for earnings growth. These two metric are moving in different directions, so while it’s hard to be confident judging performance, we think the stock is worth watching.

You might want to check this free visual report on analyst forecasts for future earnings.

Has Thomson Reuters Corporation Been A Good Investment?

Thomson Reuters Corporation has served shareholders reasonably well, with a total return of 24% over three years. But they probably wouldn’t be so happy as to think the CEO should be paid more than is normal, for companies around this size.

In Summary…

We examined the amount Thomson Reuters Corporation pays its CEO, and compared it to the amount paid by other large companies. As discussed above, we discovered that the company pays more than the median of that group.

One might like to have seen stronger growth, and the shareholder returns have failed to inspire, over the last three years. In conclusion we think the company should definitely focus on improving the business before awarding any large pay rises. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Thomson Reuters Corporation (free visualization of insider trades).

Or you could feast your eyes on this interactive graph depicting past earnings, cash flow and revenue.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.