Does Tesco PLC’s (LON:TSCO) CEO Pay Reflect Performance?

In 2014 Dave Lewis was appointed CEO of Tesco PLC (LON:TSCO). This analysis aims first to contrast CEO compensation with other large companies. Then we’ll look at a snap shot of the business growth. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.

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See our latest analysis for Tesco

How Does Dave Lewis’s Compensation Compare With Similar Sized Companies?

According to our data, Tesco PLC has a market capitalization of UK£23b, and pays its CEO total annual compensation worth UK£4.9m. (This is based on the year to February 2018). While we always look at total compensation first, we note that the salary component is less, at UK£1.3m. When we examined a group of companies with market caps over UK£6.3b, we found that their median CEO total compensation was UK£4.1m. There aren’t very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.

That means Dave Lewis receives fairly typical remuneration for the CEO of a large company. This doesn’t tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context.

You can see, below, how CEO compensation at Tesco has changed over time.

LSE:TSCO CEO Compensation, May 20th 2019
LSE:TSCO CEO Compensation, May 20th 2019

Is Tesco PLC Growing?

Over the last three years Tesco PLC has grown its earnings per share (EPS) by an average of 62% per year (using a line of best fit). Its revenue is up 11% over last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. It’s a real positive to see this sort of growth in a single year. That suggests a healthy and growing business. Shareholders might be interested in this free visualization of analyst forecasts.

Has Tesco PLC Been A Good Investment?

Boasting a total shareholder return of 51% over three years, Tesco PLC has done well by shareholders. This strong performance might mean some shareholders don’t mind if the CEO were to be paid more than is normal for a company of its size.

In Summary…

Dave Lewis is paid around what is normal the leaders of larger companies.

The company is growing earnings per share and total shareholder returns have been pleasing. Indeed, many might consider the pay rather modest, given the solid company performance! Shareholders may want to check for free if Tesco insiders are buying or selling shares.

If you want to buy a stock that is better than Tesco, this free list of high return, low debt companies is a great place to look.

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.