Is Seven West Media Limited's (ASX:SWM) CEO Salary Justified?

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Tim Worner has been the CEO of Seven West Media Limited (ASX:SWM) since 2013. First, this article will compare CEO compensation with compensation at similar sized companies. Then we'll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.

View our latest analysis for Seven West Media

How Does Tim Worner's Compensation Compare With Similar Sized Companies?

According to our data, Seven West Media Limited has a market capitalization of AU$784m, and pays its CEO total annual compensation worth AU$2.9m. (This figure is for the year to June 2018). While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at AU$2.4m. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of AU$286m to AU$1.1b. The median total CEO compensation was AU$1.0m.

It would therefore appear that Seven West Media Limited pays Tim Worner more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

You can see, below, how CEO compensation at Seven West Media has changed over time.

Is Seven West Media Limited Growing?

Over the last three years Seven West Media Limited has grown its earnings per share (EPS) by an average of 31% per year (using a line of best fit). Its revenue is up 1.8% over last year.

This demonstrates that the company has been improving recently. A good result. It's also good to see modest revenue growth, suggesting the underlying business is healthy. You might want to check this free visual report on analyst forecasts for future earnings.

Has Seven West Media Limited Been A Good Investment?

Since shareholders would have lost about 46% over three years, some Seven West Media Limited shareholders would surely be feeling negative emotions. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary...

We examined the amount Seven West Media Limited pays its CEO, and compared it to the amount paid by similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.

However, the earnings per share growth over three years is certainly impressive. On the other hand returns to investors over the same period have probably disappointed many. Considering the per share profit growth, but keeping in mind the weak returns, we'd need more time to form a view on CEO compensation. Whatever your view on compensation, you might want to check if insiders are buying or selling Seven West Media shares (free trial).

Important note: Seven West Media may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE 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.