U.S. Markets close in 59 mins

Is Westpac Banking Corporation's (ASX:WBC) CEO Paid Enough Relative To Peers?

Simply Wall St

In 2015 Brian Hartzer was appointed CEO of Westpac Banking Corporation (ASX:WBC). First, this article will compare CEO compensation with compensation at other large companies. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.

See our latest analysis for Westpac Banking

How Does Brian Hartzer's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Westpac Banking Corporation has a market cap of AU$101b, and reported total annual CEO compensation of AU$6.6m for the year to September 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at AU$2.7m. We took a group of companies with market capitalizations over AU$12b, and calculated the median CEO total compensation to be AU$5.7m. There aren't very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.

So Brian Hartzer receives a similar amount to the median CEO pay, amongst the companies we looked at. This doesn't tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context.

The graphic below shows how CEO compensation at Westpac Banking has changed from year to year.

ASX:WBC CEO Compensation, October 25th 2019

Is Westpac Banking Corporation Growing?

On average over the last three years, Westpac Banking Corporation has shrunk earnings per share by 2.0% each year (measured with a line of best fit). It saw its revenue drop 4.6% over the last year.

The lack of earnings per share growth in the last three years is unimpressive. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. You might want to check this free visual report on analyst forecasts for future earnings.

Has Westpac Banking Corporation Been A Good Investment?

Westpac Banking Corporation has served shareholders reasonably well, with a total return of 16% over three years. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

In Summary...

Brian Hartzer is paid around what is normal the leaders of larger companies.

We feel that earnings per share have been a bit disappointing, but and we don't think the total returns are amazing. We're not saying the CEO pay is too generous, but we'd venture the company should look to improve its business metrics (and share price) before paying any more. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Westpac Banking.

If you want to buy a stock that is better than Westpac Banking, this free list of high return, low debt companies is a great place to look.

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.