Yahoo Finance Does Graham Holdings Company's (NYSE:GHC) CEO Salary Reflect Performance?
In 2015 Tim O’Shaughnessy was appointed CEO of Graham Holdings Company (NYSE:GHC). First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.
View our latest analysis for Graham Holdings
How Does Tim O’Shaughnessy's Compensation Compare With Similar Sized Companies?
At the time of writing our data says that Graham Holdings Company has a market cap of US$3.7b, and is paying total annual CEO compensation of US$3.0m. (This is based on the year to December 2018). We think total compensation is more important but we note that the CEO salary is lower, at US$750k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$2.0b to US$6.4b. The median total CEO compensation was US$5.1m.
This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. While this is a good thing, you'll need to understand the business better before you can form an opinion.
The graphic below shows how CEO compensation at Graham Holdings has changed from year to year.
Is Graham Holdings Company Growing?
Graham Holdings Company has increased its earnings per share (EPS) by an average of 46% a year, over the last three years (using a line of best fit). Its revenue is up 4.8% over last year.
This demonstrates that the company has been improving recently. A good result. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has Graham Holdings Company Been A Good Investment?
I think that the total shareholder return of 42%, over three years, would leave most Graham Holdings Company shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
In Summary...
It looks like Graham Holdings Company pays its CEO less than similar sized companies. Considering the underlying business is growing earnings, this would suggest the pay is modest. And given most shareholders are probably very happy with recent returns, you might even think that Tim O’Shaughnessy deserves a raise!
It's not often we see shareholders do so well, and yet the CEO is paid modestly. But it is even better if company insiders are also buying shares with their own money. Whatever your view on compensation, you might want to check if insiders are buying or selling Graham Holdings shares (free trial).
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.
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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.
