The CEO Of Woolworths Group Limited (ASX:WOW) Might See A Pay Rise On The Horizon

Shareholders will probably not be disappointed by the robust results at Woolworths Group Limited (ASX:WOW) recently and they will be keeping this in mind as they go into the AGM on 26 October 2022. They will probably be more interested in hearing the board discuss future initiatives to further improve the business as they vote on resolutions such as executive remuneration. Here is our take on why we think CEO compensation is fair and may even warrant a raise.

Our analysis indicates that WOW is potentially undervalued!

Comparing Woolworths Group Limited's CEO Compensation With The Industry

At the time of writing, our data shows that Woolworths Group Limited has a market capitalization of AU$40b, and reported total annual CEO compensation of AU$7.6m for the year to June 2022. Notably, that's a decrease of 9.8% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at AU$2.6m.

For comparison, other companies in the industry with market capitalizations above AU$13b, reported a median total CEO compensation of AU$14m. In other words, Woolworths Group pays its CEO lower than the industry median. Furthermore, Brad Banducci directly owns AU$8.3m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2022	2021	Proportion (2022)
Salary	AU$2.6m	AU$2.6m	35%
Other	AU$4.9m	AU$5.7m	65%
Total Compensation	AU$7.6m	AU$8.4m	100%

On an industry level, around 35% of total compensation represents salary and 65% is other remuneration. Although there is a difference in how total compensation is set, Woolworths Group more or less reflects the market in terms of setting the salary. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Woolworths Group Limited's Growth Numbers

Woolworths Group Limited's earnings per share (EPS) grew 3.8% per year over the last three years. Its revenue is up 9.2% over the last year.

We would argue that the improvement in revenue is good, but isn't particularly impressive, but the modest improvement in EPS is good. It's clear the performance has been quite decent, but it it falls short of outstanding,based on this information. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Woolworths Group Limited Been A Good Investment?

With a total shareholder return of 14% over three years, Woolworths Group Limited shareholders would, in general, be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

Overall, the company hasn't done too poorly performance-wise, but we would like to see some improvement. If it continues on the same road, shareholders might feel even more confident about their investment, and have little to no objections concerning CEO pay. Instead, investors might be more interested in discussions that would help manage their longer-term growth expectations such as company business strategies and future growth potential.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 3 warning signs for Woolworths Group that investors should think about before committing capital to this stock.

Switching gears from Woolworths Group, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.