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Is Webjet Limited's (ASX:WEB) CEO Pay Justified?

Simply Wall St

John Guscic has been the CEO of Webjet Limited (ASX:WEB) since 2011. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we'll look at a snap shot of the business growth. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.

Check out our latest analysis for Webjet

How Does John Guscic's Compensation Compare With Similar Sized Companies?

Our data indicates that Webjet Limited is worth AU$1.7b, and total annual CEO compensation is AU$2.2m. (This is based on the year to June 2018). While we always look at total compensation first, we note that the salary component is less, at AU$850k. We looked at a group of companies with market capitalizations from AU$588m to AU$2.4b, and the median CEO total compensation was AU$1.5m.

Thus we can conclude that John Guscic receives more in total compensation than the median of a group of companies in the same market, and of similar size to Webjet Limited. However, this doesn't necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.

You can see a visual representation of the CEO compensation at Webjet, below.

ASX:WEB CEO Compensation, August 9th 2019

Is Webjet Limited Growing?

On average over the last three years, Webjet Limited has grown earnings per share (EPS) by 8.3% each year (using a line of best fit). Its revenue is up 23% over last year.

I would argue that the modest growth in revenue is a notable positive. And, while modest, the earnings per share growth is noticeable. So while we'd stop just short of calling this a top performer, but we think it is well worth watching. You might want to check this free visual report on analyst forecasts for future earnings.

Has Webjet Limited Been A Good Investment?

Boasting a total shareholder return of 78% over three years, Webjet Limited 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.

In Summary...

We compared the total CEO remuneration paid by Webjet Limited, and compared it to remuneration at a group of similar sized companies. We found that it pays well over the median amount paid in the benchmark group.

Over the last three years returns to investors have been great, though we might have liked stronger business growth. Considering this fine result for investors, we daresay the CEO compensation might be apt. Shareholders may want to check for free if Webjet insiders are buying or selling shares.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.

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.