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Is Wolters Kluwer N.V.'s (AMS:WKL) CEO Pay Justified?

Simply Wall St

In 2003 Nancy McKinstry was appointed CEO of Wolters Kluwer N.V. (AMS:WKL). 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. 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.

See our latest analysis for Wolters Kluwer

How Does Nancy McKinstry's Compensation Compare With Similar Sized Companies?

According to our data, Wolters Kluwer N.V. has a market capitalization of €17b, and pays its CEO total annual compensation worth €4.7m. (This figure is for the year to December 2018). While we always look at total compensation first, we note that the salary component is less, at €1.3m. We took a group of companies with market capitalizations over €7.2b, and calculated the median CEO total compensation to be €3.5m. 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, Nancy McKinstry is paid more than the median CEO pay at large companies, in the same market. However, this does not necessarily mean Wolters Kluwer N.V. 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, below, how CEO compensation at Wolters Kluwer has changed over time.

ENXTAM:WKL CEO Compensation, August 23rd 2019

Is Wolters Kluwer N.V. Growing?

Over the last three years Wolters Kluwer N.V. has grown its earnings per share (EPS) by an average of 14% per year (using a line of best fit). Its revenue is up 5.4% over last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. It's nice to see a little revenue growth, as this is consistent with healthy business conditions. Shareholders might be interested in this free visualization of analyst forecasts.

Has Wolters Kluwer N.V. Been A Good Investment?

Most shareholders would probably be pleased with Wolters Kluwer N.V. for providing a total return of 80% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

We compared total CEO remuneration at Wolters Kluwer N.V. with the amount paid at other large companies. As discussed above, we discovered that the company pays more than the median of that group.

However, the earnings per share growth over three years is certainly impressive. On top of that, in the same period, returns to shareholders have been great. So, considering this good performance, the CEO compensation may be quite appropriate. Shareholders may want to check for free if Wolters Kluwer insiders are buying or selling shares.

If you want to buy a stock that is better than Wolters Kluwer, 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.