We believe that some shareholders may be reluctant to increase the compensation of the CEO of Transurban Group (ASX: TCL)
Transurban Group (ASX: TCL) has shown strong growth in its share price in recent years. However, its profit growth has not kept pace, suggesting that there could be something wrong. The next general meeting on October 21, 2021 could be an opportunity for shareholders to express any concerns they may have to the board of directors. One of the ways in which shareholders can influence management decisions is by voting on the compensation of CEOs and officers, which studies have shown could have an impact on the performance of the company. Based on the data we’ve gathered, we believe shareholders should wait for an increase in CEO compensation until performance begins to improve.
See our latest analysis for Transurban Group
Comparison of Transurban Group CEO Compensation with Industry
Our data indicates that Transurban Group has a market capitalization of A $ 41 billion and that the CEO’s total annual compensation was reported at A $ 5.5 million for the year through June 2021. This is about ‘a notable increase of 21% compared to last year. While we always look at total compensation first, our analysis shows that the salary component is smaller, at A $ 2.3 million.
Compared to other companies in the industry with market capitalizations over AU $ 11 billion, the reported median total CEO compensation was AU $ 673,000. This suggests that Scott Charlton is paid more than the industry median. In addition, Scott Charlton also owns shares of Transurban Group valued at A $ 7.7 million directly under their own name, which tells us that they have a significant personal stake in the company.
|Making up||2021||2020||Proportion (2021)|
|Salary||AU $ 2.3 million||AU $ 2.3 million||41%|
|Other||AU $ 3.2 million||AU $ 2.3 million||59%|
|Total compensation||AU $ 5.5 million||4.6 million Australian dollars||100%|
In terms of industry, salary made up around 67% of total compensation for all the companies we analyzed, while other compensation made up 33% of the pie. Interestingly, Transurban Group allocates a smaller portion of pay to salary compared to the industry as a whole. If non-salary compensation dominates total salary, it is an indicator that the executive salary is linked to the performance of the company.
Growth of the Transurban Group
Transurban Group has reduced its earnings per share by 116% per year over the past three years. Over the past year, its turnover is down 8.9%.
The decline in BPA is a bit worrying. And the impression is worse when you consider that revenues are declining year over year. So given this relatively weak performance, shareholders probably wouldn’t want high CEO compensation. Going forward, you might want to check out this free visual report at analyst forecasts for the future profits of the company.
Has the Transurban Group been a good investment?
Most shareholders would likely be happy with Transurban Group for a total return of 38% over three years. So they might not be affected at all if the CEO were to be paid more than is normal for companies of the same size.
While shareholders are very happy with the returns they got on their initial investment, profits have not increased and that could mean that returns can be difficult to follow. At the next AGM, shareholders will have the opportunity to discuss any concerns with the board, including those related to CEO compensation and assess whether the board plan is likely to improve performance at the future.
CEO compensation is just one of the many factors that should be taken into account when reviewing company performance. In our study, we found 3 warning signs for the Transurban Group you need to be aware, and 2 of them are potentially serious.
Sure, you might find a fantastic investment by looking at another set of stocks. So take a look at this free list of interesting companies.
This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in the mentioned stocks.
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