Stock Analysis

This Is Why REA Group Limited's (ASX:REA) CEO Can Expect A Bump Up In Their Pay Packet

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Key Insights

  • REA Group's Annual General Meeting to take place on 15th of November
  • Salary of AU$1.67m is part of CEO Owen Wilson's total remuneration
  • Total compensation is 50% below industry average
  • Over the past three years, REA Group's EPS grew by 47% and over the past three years, the total shareholder return was 20%

Shareholders will probably not be disappointed by the robust results at REA Group Limited (ASX:REA) recently and they will be keeping this in mind as they go into the AGM on 15th of November. The focus will probably be on the future strategic initiatives that the board and management will put in place to improve the business rather than executive remuneration when they cast their votes on company resolutions. Here is our take on why we think CEO compensation is fair and may even warrant a raise.

Check out our latest analysis for REA Group

How Does Total Compensation For Owen Wilson Compare With Other Companies In The Industry?

According to our data, REA Group Limited has a market capitalization of AU$21b, and paid its CEO total annual compensation worth AU$4.6m over the year to June 2023. That's a fairly small increase of 6.6% over the previous year. We think total compensation is more important but our data shows that the CEO salary is lower, at AU$1.7m.

On comparing similar companies in the Australian Interactive Media and Services industry with market capitalizations above AU$12b, we found that the median total CEO compensation was AU$9.3m. This suggests that Owen Wilson is paid below the industry median. Furthermore, Owen Wilson directly owns AU$6.4m worth of shares in the company, implying that they are deeply invested in the company's success.

Component20232022Proportion (2023)
Salary AU$1.7m AU$1.6m 36%
Other AU$2.9m AU$2.7m 64%
Total CompensationAU$4.6m AU$4.3m100%

Talking in terms of the industry, salary represented approximately 55% of total compensation out of all the companies we analyzed, while other remuneration made up 45% of the pie. REA Group pays a modest slice of remuneration through salary, as compared 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.

ASX:REA CEO Compensation November 9th 2023

REA Group Limited's Growth

Over the past three years, REA Group Limited has seen its earnings per share (EPS) grow by 47% per year. In the last year, its revenue is down 1.8%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. While it would be good to see revenue growth, profits matter more in the end. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has REA Group Limited Been A Good Investment?

REA Group Limited has generated a total shareholder return of 20% over three years, so most shareholders would be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

To Conclude...

The company's overall performance, while not bad, could be better. 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 is one thing, but it is also interesting to check if the CEO is buying or selling REA Group (free visualization of insider trades).

Important note: REA Group 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.

Valuation is complex, but we're helping make it simple.

Find out whether REA Group is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis

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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.