Is Carnival plc’s (LON:CCL) CEO Overpaid Relative To Its Peers?

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Arnold Donald became the CEO of Carnival plc (LON:CCL) in 2013. This analysis aims first to contrast CEO compensation with 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.

View our latest analysis for Carnival

How Does Arnold Donald’s Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Carnival plc has a market cap of UK£25b, and is paying total annual CEO compensation of US$14m. (This figure is for the year to November 2018). We think total compensation is more important but we note that the CEO salary is lower, at US$1.5m. We took a group of companies with market capitalizations over US$8.0b, and calculated the median CEO total compensation to be US$4.8m. (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).

It would therefore appear that Carnival plc pays Arnold Donald 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.

The graphic below shows how CEO compensation at Carnival has changed from year to year.

LSE:CCL CEO Compensation, July 8th 2019
LSE:CCL CEO Compensation, July 8th 2019

Is Carnival plc Growing?

Carnival plc has increased its earnings per share (EPS) by an average of 11% a year, over the last three years (using a line of best fit). Its revenue is up 7.8% over last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It’s nice to see a little revenue growth, as this is consistent with healthy business conditions.

Has Carnival plc Been A Good Investment?

Carnival plc has generated a total shareholder return of 13% over three years, so most shareholders would be reasonably content. But they probably wouldn’t be so happy as to think the CEO should be paid more than is normal, for companies around this size.

In Summary…

We compared total CEO remuneration at Carnival plc with the amount paid at other large companies. We found that it pays well over the median amount paid in the benchmark group.

Importantly, though, the company has impressed with its earnings per share growth, over three years. Looking at the same time period, we think that the shareholder returns are respectable. So, considering the EPS growth we do not wish to criticize the level of CEO compensation, though we’d recommend further research on management. So you may want to check if insiders are buying Carnival shares with their own money (free access).

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

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.