Is Woodside Petroleum Ltd's (ASX:WPL) CEO Paid Enough Relative To Peers?
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Peter Coleman became the CEO of Woodside Petroleum Ltd (ASX:WPL) in 2011. 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 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.
View our latest analysis for Woodside Petroleum
How Does Peter Coleman's Compensation Compare With Similar Sized Companies?
According to our data, Woodside Petroleum Ltd has a market capitalization of AU$34b, and pays its CEO total annual compensation worth US$6.5m. (This number is for the twelve months until December 2018). That's below the compensation, last year. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$2.0m. We looked at a group of companies with market capitalizations over US$8.0b and the median CEO total compensation was US$3.6m. There aren't very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.
Thus we can conclude that Peter Coleman receives more in total compensation than the median of a group of large companies in the same market as Woodside Petroleum Ltd. However, this doesn't necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.
The graphic below shows how CEO compensation at Woodside Petroleum has changed from year to year.
Is Woodside Petroleum Ltd Growing?
Over the last three years Woodside Petroleum Ltd has grown its earnings per share (EPS) by an average of 62% per year (using a line of best fit). In the last year, its revenue is up 32%.
This demonstrates that the company has been improving recently. A good result. The combination of strong revenue growth with medium-term earnings per share improvement certainly points to the kind of growth I like to see. Shareholders might be interested in this free visualization of analyst forecasts.
Has Woodside Petroleum Ltd Been A Good Investment?
Most shareholders would probably be pleased with Woodside Petroleum Ltd for providing a total return of 58% 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 the total CEO remuneration paid by Woodside Petroleum Ltd, and compared it to remuneration at a group of other large companies. 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. In addition, shareholders have done well over the same time period. So, considering this good performance, the CEO compensation may be quite appropriate. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Woodside Petroleum.
If you want to buy a stock that is better than Woodside Petroleum, this free list of high return, low debt companies is a great place to look.
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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.
