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Why Thomson Reuters Corporation's (TSE:TRI) CEO Pay Matters To You
In 2012 Jim Smith was appointed CEO of Thomson Reuters Corporation (TSE:TRI). This analysis aims first to contrast CEO compensation with other large companies. After that, we will consider the growth in the business. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.
See our latest analysis for Thomson Reuters
How Does Jim Smith's Compensation Compare With Similar Sized Companies?
At the time of writing our data says that Thomson Reuters Corporation has a market cap of CA$36b, and is paying total annual CEO compensation of US$10m. (This is based on the year to December 2017). We think total compensation is more important but we note that the CEO salary is lower, at US$1.6m. When we examined a group of companies with market caps over US$8.0b, we found that their median CEO compensation was US$6.5m. There aren't very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.
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. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
You can see a visual representation of the CEO compensation at Thomson Reuters, below.
Is Thomson Reuters Corporation Growing?
Thomson Reuters Corporation saw earnings per share stay pretty flat over the last three years, albeit with a slight decrease, according to the line of best fit. Its revenue is down -51% over last year.
In the last three years the company has failed to grow earnings per s. 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. It could be important to check this free visual depiction of what analysts expect for the future.
Has Thomson Reuters Corporation Been A Good Investment?
Most shareholders would probably be pleased with Thomson Reuters Corporation for providing a total return of 45% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
In Summary...
We examined the amount Thomson Reuters Corporation pays its CEO, and compared it to the amount paid by other large companies. Our data suggests that it pays above the median CEO pay within that group.
We think many shareholders would be underwhelmed with the business growth over the last three years.On the other hand, returns have been good, so the company is doing something right. Considering this, shareholders are probably not too worried about the CEO compensation. So you may want to check if insiders are buying Thomson Reuters shares with their own money (free access).
Arguably, business quality is much more important than CEO compensation levels. So check out this freelist 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 editorial-team@simplywallst.com. 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.
About TSX:TRI
Thomson Reuters
Operates as a content and technology company in the Americas, Europe, the Middle East, Africa, and the Asia Pacific.
Undervalued with adequate balance sheet and pays a dividend.
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