Should You Worry About Whitehaven Coal Limited's (ASX:WHC) CEO Pay Cheque?
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Paul Flynn has been the CEO of Whitehaven Coal Limited (ASX:WHC) since 2013. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we'll consider growth that the business demonstrates. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.
View our latest analysis for Whitehaven Coal
How Does Paul Flynn's Compensation Compare With Similar Sized Companies?
At the time of writing our data says that Whitehaven Coal Limited has a market cap of AU$3.7b, and is paying total annual CEO compensation of AU$4.6m. (This number is for the twelve months until June 2018). While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at AU$1.3m. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of AU$2.9b to AU$9.2b. The median total CEO compensation was AU$3.4m.
It would therefore appear that Whitehaven Coal Limited pays Paul Flynn more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration 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 a visual representation of the CEO compensation at Whitehaven Coal, below.
Is Whitehaven Coal Limited Growing?
On average over the last three years, Whitehaven Coal Limited has grown earnings per share (EPS) by 79% each year (using a line of best fit). It achieved revenue growth of 13% over the last year.
This demonstrates that the company has been improving recently. A good result. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. Shareholders might be interested in this free visualization of analyst forecasts.
Has Whitehaven Coal Limited Been A Good Investment?
I think that the total shareholder return of 301%, over three years, would leave most Whitehaven Coal Limited shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
In Summary...
We examined the amount Whitehaven Coal Limited pays its CEO, and compared it to the amount paid by similar sized companies. As discussed above, we discovered that the company pays more than the median of 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. Shareholders may want to check for free if Whitehaven Coal insiders are buying or selling shares.
If you want to buy a stock that is better than Whitehaven Coal, 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.
