How Should Investors Feel About Cleanaway Waste Management's (ASX:CWY) CEO Remuneration?

Vik Bansal became the CEO of Cleanaway Waste Management Limited (ASX:CWY) in 2015, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

Check out our latest analysis for Cleanaway Waste Management

How Does Total Compensation For Vik Bansal Compare With Other Companies In The Industry?

According to our data, Cleanaway Waste Management Limited has a market capitalization of AU$5.0b, and paid its CEO total annual compensation worth AU$2.6m over the year to June 2020. Notably, that's a decrease of 40% over the year before. We note that the salary portion, which stands at AU$1.45m constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the same industry with market capitalizations ranging between AU$2.6b and AU$8.3b had a median total CEO compensation of AU$3.5m. This suggests that Cleanaway Waste Management remunerates its CEO largely in line with the industry average. Moreover, Vik Bansal also holds AU$6.5m worth of Cleanaway Waste Management stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Speaking on an industry level, nearly 66% of total compensation represents salary, while the remainder of 34% is other remuneration. In Cleanaway Waste Management's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Cleanaway Waste Management Limited's Growth Numbers

Cleanaway Waste Management Limited has seen its earnings per share (EPS) increase by 7.6% a year over the past three years. Its revenue is up 2.1% over the last year.

We're not particularly impressed by the revenue growth, but the modest improvement in EPS is good. Considering these factors we'd say performance has been pretty decent, though not amazing. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Cleanaway Waste Management Limited Been A Good Investment?

Boasting a total shareholder return of 77% over three years, Cleanaway Waste Management Limited has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

As we noted earlier, Cleanaway Waste Management pays its CEO in line with similar-sized companies belonging to the same industry. But the business isn't reporting great numbers in terms of EPS growth. Meanwhile, shareholder returns have remained positive over the same time frame. We would like to see EPS growth from the business, although we wouldn't say the CEO compensation is high.

Whatever your view on compensation, you might want to check if insiders are buying or selling Cleanaway Waste Management shares (free trial).

Important note: Cleanaway Waste Management 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.

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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. 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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