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Is Western Areas Limited's (ASX:WSA) CEO Paid Enough Relative To Peers?

Simply Wall St

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Dan Lougher became the CEO of Western Areas Limited (ASX:WSA) in 2012. First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.

Check out our latest analysis for Western Areas

How Does Dan Lougher's Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Western Areas Limited has a market cap of AU$543m, and is paying total annual CEO compensation of AU$2.0m. (This number is for the twelve months until June 2018). While we always look at total compensation first, we note that the salary component is less, at AU$716k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of AU$287m to AU$1.1b. The median total CEO compensation was AU$1.0m.

Thus we can conclude that Dan Lougher receives more in total compensation than the median of a group of companies in the same market, and of similar size to Western Areas Limited. 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 Western Areas has changed over time.

ASX:WSA CEO Compensation, July 2nd 2019

Is Western Areas Limited Growing?

On average over the last three years, Western Areas Limited has grown earnings per share (EPS) by 85% each year (using a line of best fit). In the last year, its revenue is up 18%.

This demonstrates that the company has been improving recently. A good result. It's a real positive to see this sort of growth in a single year. That suggests a healthy and growing business. You might want to check this free visual report on analyst forecasts for future earnings.

Has Western Areas Limited Been A Good Investment?

Given the total loss of 18% over three years, many shareholders in Western Areas Limited are probably rather dissatisfied, to say the least. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary...

We compared total CEO remuneration at Western Areas Limited with the amount paid at companies with a similar market capitalization. Our data suggests that it pays above the median CEO pay within that group.

However we must not forget that the EPS growth has been very strong over three years. On the other hand returns to investors over the same period have probably disappointed many. One might thus conclude that it would be better if the company waited until growth is reflected in the share price, before increasing CEO compensation. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Western Areas (free visualization of insider trades).

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.