The share price of Comcast Corporation (NASDAQ:CMCS.A) has increased significantly over the past few years. However, the earnings growth has not kept up with the share price momentum, suggesting that some other factors may be driving the price direction. Some of these issues will occupy shareholders' minds as the AGM rolls around on 02 June 2021. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.
Comparing Comcast Corporation's CEO Compensation With the industry
Our data indicates that Comcast Corporation has a market capitalization of US$256b, and total annual CEO compensation was reported as US$33m for the year to December 2020. Notably, that's a decrease of 10% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at US$3.4m.
For comparison, other companies in the industry with market capitalizations above US$8.0b, reported a median total CEO compensation of US$21m. Hence, we can conclude that Brian Roberts is remunerated higher than the industry median. What's more, Brian Roberts holds US$2.0b worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Speaking on an industry level, nearly 22% of total compensation represents salary, while the remainder of 78% is other remuneration. In Comcast's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
Comcast Corporation's Growth
Over the last three years, Comcast Corporation has shrunk its earnings per share by 20% per year. It saw its revenue drop 4.2% over the last year.
Overall this is not a very positive result for shareholders. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Comcast Corporation Been A Good Investment?
Boasting a total shareholder return of 88% over three years, Comcast Corporation has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
Although shareholders would be quite happy with the returns they have earned on their initial investment, earnings have failed to grow and this could mean returns may be hard to keep up. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.
CEO compensation can have a massive impact on performance, but it's just one element. We've identified 3 warning signs for Comcast that investors should be aware of in a dynamic business environment.
Important note: Comcast is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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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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