Jim Smith became the CEO of Thomson Reuters Corporation (TSE:TRI) in 2012. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. Next, we’ll consider growth that the business demonstrates. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.
How Does Jim Smith’s Compensation Compare With Similar Sized Companies?
Our data indicates that Thomson Reuters Corporation is worth CA$44b, and total annual CEO compensation was reported as US$14m for the year to December 2018. While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$1.6m. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. We took a group of companies with market capitalizations over US$8.0b, and calculated the median CEO total compensation to be US$7.0m. Once you start looking at very large companies, you need to take a broader range, because there simply aren’t that many of them.
It would therefore appear that Thomson Reuters Corporation pays Jim Smith more than the median CEO remuneration at large companies, in the same market. However, this fact alone doesn’t mean the remuneration is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business. You might want to check this free visual report on analyst forecasts for future earnings.
You can see a visual representation of the CEO compensation at Thomson Reuters, below.
Is Thomson Reuters Corporation Growing?
On average over the last three years, Thomson Reuters Corporation has shrunk earnings per share by 40% each year (measured with a line of best fit). In the last year, its revenue is up 6.4%.
Few shareholders would be pleased to read that earnings per share are lower over three years. The modest increase in revenue in the last year isn’t enough to make me overlook the disappointing change in earnings per share. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO.
Has Thomson Reuters Corporation Been A Good Investment?
I think that the total shareholder return of 60%, over three years, would leave most Thomson Reuters Corporation shareholders smiling. 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.
We compared the total CEO remuneration paid by Thomson Reuters Corporation, and compared it to remuneration at a group of other large companies. Our data suggests that it pays above the median CEO pay within that group.
Neither earnings per share nor revenue have been growing sufficiently to impress us, over the last three years. However, we can’t argue with the strong returns to shareholders, over the same time period. Considering this, shareholders are probably not too worried about the CEO compensation. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Thomson Reuters (free visualization of insider trades).
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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