Vince McMahon became the CEO of World Wrestling Entertainment, Inc. (NYSE:WWE) in 2009. First, this article will compare CEO compensation with compensation at similar sized 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.
How Does Vince McMahon’s Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that World Wrestling Entertainment, Inc. has a market cap of US$3.5b, and reported total annual CEO compensation of US$3.5m for the year to December 2019. That’s less than last year. While we always look at total compensation first, we note that the salary component is less, at US$1.4m. 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 looked at a group of companies with market capitalizations from US$2.0b to US$6.4b, and the median CEO total compensation was US$6.0m.
Next, let’s break down remuneration compositions to understand how the industry and company compare with each other. Talking in terms of the sector, salary represented approximately 30% of total compensation out of all the companies we analysed, while other remuneration made up 70% of the pie. According to our research, World Wrestling Entertainment has allocated a higher percentage of pay to salary in comparison to the broader sector.
This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. Though positive, it’s important we delve into the performance of the actual business. The graphic below shows how CEO compensation at World Wrestling Entertainment has changed from year to year.
Is World Wrestling Entertainment, Inc. Growing?
On average over the last three years, World Wrestling Entertainment, Inc. has seen earnings per share (EPS) move in a favourable direction by 40% each year (using a line of best fit). Its revenue is up 16% over last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. 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 World Wrestling Entertainment, Inc. Been A Good Investment?
Most shareholders would probably be pleased with World Wrestling Entertainment, Inc. for providing a total return of 137% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
It looks like World Wrestling Entertainment, Inc. pays its CEO less than similar sized companies.
Since the business is growing, many would argue this suggests the pay is modest. The pleasing shareholder returns are the cherry on top; you might even consider that Vince McMahon deserves a raise! Most shareholders like to see a modestly paid CEO combined with strong performance by the company. The cherry on top would be if company insiders are buying shares with their own money. Shifting gears from CEO pay for a second, we’ve picked out 2 warning signs for World Wrestling Entertainment that investors should be aware of in a dynamic business environment.
Important note: World Wrestling Entertainment may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
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