Hikmet Ersek has been the CEO of The Western Union Company (NYSE:WU) since 2010, and this article will examine the executive’s compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Western Union. According to our data, The Western Union Company has a market capitalization of US$9.3b, and paid its CEO total annual compensation worth US$10m over the year to December 2019. That’s a notable increase of 10% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.0m.
In comparison with other companies in the industry with market capitalizations ranging from US$4.0b to US$12b, the reported median CEO total compensation was US$7.0m. Accordingly, our analysis reveals that The Western Union Company pays Hikmet Ersek north of the industry median. What’s more, Hikmet Ersek holds US$22m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
On an industry level, around 14% of total compensation represents salary and 86% is other remuneration. Western Union sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it’s an indicator that the executive’s salary is tied to company performance.
A Look at The Western Union Company’s Growth Numbers
The Western Union Company’s earnings per share (EPS) grew 54% per year over the last three years. In the last year, its revenue is down 10%.
Shareholders would be glad to know that the company has improved itself over the last few years. It’s always a tough situation when revenues are not growing, but ultimately profits are more important. Historical performance can sometimes be a good indicator on what’s coming up next but if you want to peer into the company’s future you might be interested in this free visualization of analyst forecasts.
Has The Western Union Company Been A Good Investment?
With a total shareholder return of 33% over three years, The Western Union Company shareholders would, in general, be reasonably content. But they probably wouldn’t be so happy as to think the CEO should be paid more than is normal, for companies around this size.
As previously discussed, Hikmet is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. However, the EPS growth over three years is certainly impressive. We also think investor returns are steady over the same time period. So, considering the EPS growth we do not wish to criticize CEO compensation, though we’d recommend further research on management.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We’ve identified 2 warning signs for Western Union that investors should be aware of in a dynamic business environment.
Switching gears from Western Union, 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.
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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.
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