Does Western Areas' (ASX:WSA) CEO Salary Compare Well With The Performance Of The Company?

This article will reflect on the compensation paid to Dan Lougher who has served as CEO of Western Areas Limited (ASX:WSA) since 2012. This analysis will also assess whether Western Areas pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

View our latest analysis for Western Areas

How Does Total Compensation For Dan Lougher Compare With Other Companies In The Industry?

According to our data, Western Areas Limited has a market capitalization of AU$693m, and paid its CEO total annual compensation worth AU$2.0m over the year to June 2020. That is, the compensation was roughly the same as last year. While we always look at total compensation first, our analysis shows that the salary component is less, at AU$779k.

On comparing similar companies from the same industry with market caps ranging from AU$269m to AU$1.1b, we found that the median CEO total compensation was AU$953k. Hence, we can conclude that Dan Lougher is remunerated higher than the industry median. What's more, Dan Lougher holds AU$1.3m worth of shares in the company in their own name.

Speaking on an industry level, nearly 69% of total compensation represents salary, while the remainder of 31% is other remuneration. It's interesting to note that Western Areas allocates a smaller portion of compensation to salary in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at Western Areas Limited's Growth Numbers

Over the past three years, Western Areas Limited has seen its earnings per share (EPS) grow by 18% per year. In the last year, its revenue is up 15%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Western Areas Limited Been A Good Investment?

Given the total shareholder loss of 8.9% over three years, many shareholders in Western Areas Limited are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

As we touched on above, Western Areas Limited is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. However, we must not forget that the EPS growth has been very strong, but it's disappointing to see negative shareholder returns over the same period. Although we don't think the CEO pay is too high, considering negative investor returns, it is more generous than modest.

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

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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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