We Think Some Shareholders May Hesitate To Increase Transurban Group's (ASX:TCL) CEO Compensation

Transurban Group (ASX:TCL) has exhibited strong share price growth in the past few years. However, its earnings growth has not kept up, suggesting that there may be something amiss. The upcoming AGM on 21 October 2021 may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.

View our latest analysis for Transurban Group

Comparing Transurban Group's CEO Compensation With the industry

Our data indicates that Transurban Group has a market capitalization of AU$41b, and total annual CEO compensation was reported as AU$5.5m for the year to June 2021. That's a notable increase of 21% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at AU$2.3m.

In comparison with other companies in the industry with market capitalizations over AU$11b , the reported median total CEO compensation was AU$673k. This suggests that Scott Charlton is paid more than the median for the industry. Moreover, Scott Charlton also holds AU$7.7m worth of Transurban Group stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2021	2020	Proportion (2021)
Salary	AU$2.3m	AU$2.3m	41%
Other	AU$3.2m	AU$2.3m	59%
Total Compensation	AU$5.5m	AU$4.6m	100%

Talking in terms of the industry, salary represented approximately 67% of total compensation out of all the companies we analyzed, while other remuneration made up 33% of the pie. It's interesting to note that Transurban Group allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

Transurban Group's Growth

Transurban Group has reduced its earnings per share by 116% a year over the last three years. In the last year, its revenue is down 8.9%.

The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Transurban Group Been A Good Investment?

Most shareholders would probably be pleased with Transurban Group for providing a total return of 38% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

To Conclude...

Although shareholders would be quite happy with the returns they have earned on their initial investment, earnings have failed to grow and this could mean returns may be hard to keep up. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 3 warning signs for Transurban Group you should be aware of, and 2 of them are potentially serious.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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.

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