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Friday, January 27, 2023

Shareholders probably won’t have a problem with Westpac Banking Corporation (ASX:WBC) CEO compensation

Although Westpac Banking Corporation (ASX:WBC) share price has grown positively in recent years, earnings per share growth has not been up as expected by investors, suggesting that there could be other factors at play driving share prices Actions. These concerns will be on the minds of shareholders when they address the General Shareholders’ Meeting to be held on December 13, 2022. It would also be an opportunity for them to influence management by exercising their voting power on resolutions the company, including CEO and executive compensation, which could impact the company’s performance in the future. In our analysis below, we show why shareholders may consider postponing an increase in CEO compensation until company performance improves.

See our latest analysis of Westpac Banking

How does Peter King’s total compensation compare to other companies in the industry?

According to our data, Westpac Banking Corporation has a market capitalization of A$83 billion and paid its CEO a total annual compensation of A$5 million for the year to September 2022. That’s a remarkable 19% increase. compared to last year. While this analysis focuses on total compensation, it’s worth acknowledging that the salary portion is smaller, valued at A$2.4 million.

Compared to other companies in the industry with market capitalizations of more than A$12 billion, median total CEO compensation was A$4.0 million. This suggests that Westpac Banking pays its CEO largely in line with the industry average. In addition, Peter King also owns A$4.1 million worth of Westpac Banking shares directly under his own name.

Component

2022

2021

Ratio (2022)

Salary

AU$2.4 million

AU$2.4 million

48%

Other

AU$2.6 million

AU$1.8 million

52%

full compensation

A$5.0 million

A$4.2 million

100%

At the industry level, approximately 48% of total compensation is salary and 52% is other compensation. Our data reveals that Westpac Banking assigns salaries more or less in line with the broader market. If non-salary compensation dominates total pay, it is an indicator that the executive’s salary is tied to company performance.

CEO compensation

Westpac Banking Corporation Growth

Over the last three years, Westpac Banking Corporation has reduced its earnings per share by 6.1% per year. In the last year, their income has dropped 12%.

The drop in EPS is a bit worrisome. And the fact that revenue is declining year on year arguably paints an ugly picture. It’s hard to argue that the company is running on all cylinders, so shareholders may be wary of high pay for CEOs. Looking ahead, you might want to check out this free visual report on analyst forecasts for the future profits of the company.

Has Westpac Banking Corporation been a good investment?

Westpac Banking Corporation has generated a total return to shareholders of 9.6% over three years, so most shareholders wouldn’t be too disappointed. Although, there is always room for improvement. Consequently, a proposal to increase CEO compensation without seeing an improvement in shareholder returns might not be welcomed by the majority of shareholders.

In conclusion…

Shareholder returns, while positive, must be considered alongside earnings, which have not grown at all recently. This makes us think that stock price momentum may subside in the future. 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’s plan is likely to improve future performance.

CEO compensation is a crucial aspect to consider, but investors should also be aware of other issues related to business performance. That’s why we did some research and identified 1 warning sign for Westpac Banking What investors should think about before committing capital to this stock.

Important note: Westpac Banking is an exciting stock, but we understand that investors may be looking for an unencumbered balance sheet and blockbuster returns. you might find something better on this list of interesting companies with high ROE and low debt.

Do you have comments on this article? Worried about the content? Get in touch with us directly. Alternatively, email the editorial team (at) Simplywallst.com.

This Simply Wall St article is general in nature. We provide feedback based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell any stock, and it does not take into account your goals or financial situation. Our goal is to provide you with long-term focused analysis driven by fundamental data. Please note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative material. Simply Wall St does not have a position in any of the mentioned stocks.

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