Yahoo Finance How Much Is Whitehaven Coal Limited (ASX:WHC) Paying Its CEO?
Paul Flynn became the CEO of Whitehaven Coal Limited (ASX:WHC) in 2013, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Whitehaven Coal.
Check out our latest analysis for Whitehaven Coal
How Does Total Compensation For Paul Flynn Compare With Other Companies In The Industry?
Our data indicates that Whitehaven Coal Limited has a market capitalization of AU$1.7b, and total annual CEO compensation was reported as AU$3.0m for the year to June 2020. That's a fairly small increase of 3.0% over the previous year. We note that the salary portion, which stands at AU$1.51m constitutes the majority of total compensation received by the CEO.
On comparing similar companies from the same industry with market caps ranging from AU$1.3b to AU$4.2b, we found that the median CEO total compensation was AU$2.2m. This suggests that Paul Flynn is paid more than the median for the industry. Furthermore, Paul Flynn directly owns AU$4.3m worth of shares in the company, implying that they are deeply invested in the company's success.
Component | 2020 | 2019 | Proportion (2020) |
Salary | AU$1.5m | AU$1.5m | 51% |
Other | AU$1.5m | AU$1.4m | 49% |
Total Compensation | AU$3.0m | AU$2.9m | 100% |
On an industry level, around 76% of total compensation represents salary and 24% is other remuneration. Whitehaven Coal pays a modest slice of remuneration through salary, as compared to the broader industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
A Look at Whitehaven Coal Limited's Growth Numbers
Whitehaven Coal Limited has reduced its earnings per share by 58% a year over the last three years. Its revenue is down 31% over the previous year.
Few shareholders would be pleased to read that EPS have declined. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Whitehaven Coal Limited Been A Good Investment?
Given the total shareholder loss of 55% over three years, many shareholders in Whitehaven Coal Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
In Summary...
As we noted earlier, Whitehaven Coal pays its CEO higher than the norm for similar-sized companies belonging to the same industry. This doesn't look good against shareholder returns, which have been negative for the past three years. Add to that declining EPS growth, and you have the perfect recipe for shareholder irritation. Considering such poor performance, we think shareholders might be concerned if the CEO's compensation were to grow.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 4 warning signs for Whitehaven Coal that investors should think about before committing capital to this stock.
Switching gears from Whitehaven Coal, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
