Despite Westpac Banking Corporation's (ASX:WBC) share price growing positively in the past few years, the per-share earnings growth has not grown to investors' expectations, suggesting that there could be other factors at play driving the share price. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 13 December 2022. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.
How Does Total Compensation For Peter King Compare With Other Companies In The Industry?
According to our data, Westpac Banking Corporation has a market capitalization of AU$83b, and paid its CEO total annual compensation worth AU$5.0m over the year to September 2022. That's a notable increase of 19% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at AU$2.4m.
In comparison with other companies in the industry with market capitalizations over AU$12b, the reported median total CEO compensation was AU$4.0m. This suggests that Westpac Banking remunerates its CEO largely in line with the industry average. Moreover, Peter King also holds AU$4.1m worth of Westpac Banking stock directly under their own name.
On an industry level, roughly 48% of total compensation represents salary and 52% is other remuneration. Our data reveals that Westpac Banking allocates salary more or less in line with the wider market. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
Westpac Banking Corporation's Growth
Over the last three years, Westpac Banking Corporation has shrunk its earnings per share by 6.1% per year. In the last year, its revenue is down 12%.
The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Westpac Banking Corporation Been A Good Investment?
Westpac Banking Corporation has generated a total shareholder return of 9.6% over three years, so most shareholders wouldn't be too disappointed. Although, there's always room to improve. Accordingly, a proposal to increase CEO remuneration without seeing an improvement in shareholder returns might not be met favorably by most shareholders.
Shareholder returns, while positive, should be looked at along with earnings, which have not grown at all recently. This makes us think the share price momentum may slow in the future. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 1 warning sign for Westpac Banking that investors should think about before committing capital to this stock.
Important note: Westpac Banking is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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