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Andy Penn has been the CEO of Telstra Corporation Limited (ASX:TLS) since 2015. First, this article will compare CEO compensation with compensation at other large companies. After that, we will consider the growth in the business. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Andy Penn’s Compensation Compare With Similar Sized Companies?
According to our data, Telstra Corporation Limited has a market capitalization of AU$40b, and pays its CEO total annual compensation worth AU$4.5m. (This number is for the twelve months until June 2018). While we always look at total compensation first, we note that the salary component is less, at AU$2.4m. When we examined a group of companies with market caps over AU$11b, we found that their median CEO total compensation was AU$5.7m. (We took a wide range because the CEOs of massive companies tend to be paid similar amounts – even though some are quite a bit bigger than others).
That means Andy Penn receives fairly typical remuneration for the CEO of a large company. While this data point isn’t particularly informative alone, it gains more meaning when considered with business performance.
You can see, below, how CEO compensation at Telstra has changed over time.
Is Telstra Corporation Limited Growing?
Telstra Corporation Limited has reduced its earnings per share by an average of 3.8% a year, over the last three years (measured with a line of best fit). In the last year, its revenue changed by just -0.9%.
Sadly for shareholders, earnings per share are actually down, over three years. And the flat revenue is seriously uninspiring. These factors suggest that the business performance wouldn’t really justify a high pay packet for the CEO. You might want to check this free visual report on analyst forecasts for future earnings.
Has Telstra Corporation Limited Been A Good Investment?
With a three year total loss of 28%, Telstra Corporation Limited would certainly have some dissatisfied shareholders. It therefore might be upsetting for shareholders if the CEO were paid generously.
Andy Penn is paid around what is normal the leaders of larger companies.
Returns have been disappointing and the company is not growing its earnings per share. Most would consider it prudent for the company to hold off any CEO pay rise until performance improves. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Telstra.
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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.