Is Transurban Group (ASX:TCL) Overpaying Its CEO?

Scott Charlton has been the CEO of Transurban Group (ASX:TCL) since 2012. This analysis aims first to contrast CEO compensation with other large companies. After that, we will consider the growth in the business. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.

Check out our latest analysis for Transurban Group

How Does Scott Charlton’s Compensation Compare With Similar Sized Companies?

Our data indicates that Transurban Group is worth AU$43b, and total annual CEO compensation was reported as AU$7.2m for the year to June 2019. While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at AU$2.3m. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. We took a group of companies with market capitalizations over AU$12b, and calculated the median CEO total compensation to be AU$5.7m. (We took a wide range because the CEOs of massive companies tend to be paid similar amounts – even though some are quite a bit bigger than others).

That means Scott Charlton receives fairly typical remuneration for the CEO of a large company. 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.

You can see a visual representation of the CEO compensation at Transurban Group, below.

ASX:TCL CEO Compensation, January 28th 2020
ASX:TCL CEO Compensation, January 28th 2020

Is Transurban Group Growing?

Over the last three years Transurban Group has grown its earnings per share (EPS) by an average of 17% per year (using a line of best fit). In the last year, its revenue is up 26%.

This demonstrates that the company has been improving recently. A good result. It’s great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. You might want to check this free visual report on analyst forecasts for future earnings.

Has Transurban Group Been A Good Investment?

I think that the total shareholder return of 81%, over three years, would leave most Transurban Group shareholders smiling. This strong performance might mean some shareholders don’t mind if the CEO were to be paid more than is normal for a company of its size.

In Summary…

Scott Charlton is paid around what is normal the leaders of larger companies.

The company is growing earnings per share and total shareholder returns have been pleasing. So one could argue the CEO compensation is quite modest, if you consider company performance! Shareholders may want to check for free if Transurban Group insiders are buying or selling shares.

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

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.

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