Key Things To Understand About West Pharmaceutical Services' (NYSE:WST) CEO Pay Cheque

By
Simply Wall St
Published
November 16, 2020
NYSE:WST

This article will reflect on the compensation paid to Eric Green who has served as CEO of West Pharmaceutical Services, Inc. (NYSE:WST) since 2015. This analysis will also assess whether West Pharmaceutical Services pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

Check out our latest analysis for West Pharmaceutical Services

How Does Total Compensation For Eric Green Compare With Other Companies In The Industry?

At the time of writing, our data shows that West Pharmaceutical Services, Inc. has a market capitalization of US$22b, and reported total annual CEO compensation of US$6.5m for the year to December 2019. That's a notable increase of 21% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$936k.

For comparison, other companies in the industry with market capitalizations above US$8.0b, reported a median total CEO compensation of US$9.9m. Accordingly, West Pharmaceutical Services pays its CEO under the industry median. Moreover, Eric Green also holds US$21m worth of West Pharmaceutical Services stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20192018Proportion (2019)
Salary US$936k US$880k 14%
Other US$5.6m US$4.5m 86%
Total CompensationUS$6.5m US$5.4m100%

On an industry level, around 21% of total compensation represents salary and 79% is other remuneration. West Pharmaceutical Services sets aside a smaller share of compensation for salary, in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

ceo-compensation
NYSE:WST CEO Compensation November 16th 2020

West Pharmaceutical Services, Inc.'s Growth

Over the past three years, West Pharmaceutical Services, Inc. has seen its earnings per share (EPS) grow by 18% per year. Its revenue is up 14% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has West Pharmaceutical Services, Inc. Been A Good Investment?

Most shareholders would probably be pleased with West Pharmaceutical Services, Inc. for providing a total return of 197% over three years. 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...

As we touched on above, West Pharmaceutical Services, Inc. is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. When taking into account the company's strong EPS growth over the past three years, it appears CEO compensation is modest. And given most shareholders are probably very happy with recent shareholder returns, they might even think Eric deserves a raise!

So you may want to check if insiders are buying West Pharmaceutical Services shares with their own money (free access).

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.

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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. 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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