Dan Lougher became the CEO of Western Areas Limited (ASX:WSA) in 2012, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

See our latest analysis for Western Areas

How Does Total Compensation For Dan Lougher Compare With Other Companies In The Industry?

According to our data, Western Areas Limited has a market capitalization of AU$685m, and paid its CEO total annual compensation worth AU$2.0m over the year to June 2020. This means that the compensation hasn't changed much from last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at AU$779k.

On examining similar-sized companies in the industry with market capitalizations between AU$261m and AU$1.0b, we discovered that the median CEO total compensation of that group was AU$951k. This suggests that Dan Lougher is paid more than the median for the industry. Moreover, Dan Lougher also holds AU$1.3m worth of Western Areas stock directly under their own name.

On an industry level, roughly 69% of total compensation represents salary and 31% is other remuneration. It's interesting to note that Western Areas allocates a smaller portion of compensation to salary in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

Western Areas Limited's Growth

Western Areas Limited's earnings per share (EPS) grew 18% per year over the last three years. In the last year, its revenue is up 15%.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's a real positive to see this sort of revenue growth in a single year. That suggests a healthy and growing business. 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 Western Areas Limited Been A Good Investment?

Given the total shareholder loss of 16% over three years, many shareholders in Western Areas Limited are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude…

As previously discussed, Dan is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. But the company has impressed with its EPS growth, but we cannot say the same about the uninspiring shareholder returns (over the last three years). Although we'd stop short of calling it inappropriate, we think Dan is earning a very handsome sum.

Whatever your view on compensation, you might want to check if insiders are buying or selling Western Areas 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.

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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