Steve Milligan has been the CEO of Western Digital Corporation (NASDAQ:WDC) since 2013. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. Next, we'll consider growth that the business demonstrates. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.
How Does Steve Milligan's Compensation Compare With Similar Sized Companies?
According to our data, Western Digital Corporation has a market capitalization of US$20b, and paid its CEO total annual compensation worth US$13m over the year to June 2019. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$1.3m. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. We looked at a group of companies with market capitalizations over US$8.0b and the median CEO total compensation was US$11m. (We took a wide range because the CEOs of massive companies tend to be paid similar amounts - even though some are quite a bit bigger than others).
That means Steve Milligan receives fairly typical remuneration for the CEO of a large company. This doesn't tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context.
The graphic below shows how CEO compensation at Western Digital has changed from year to year.
Is Western Digital Corporation Growing?
Western Digital Corporation has reduced its earnings per share by an average of 23% a year, over the last three years (measured with a line of best fit). Its revenue is down 24% over last year.
Few shareholders would be pleased to read that earnings per share are lower over three years. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. You might want to check this free visual report on analyst forecasts for future earnings.
Has Western Digital Corporation Been A Good Investment?
Western Digital Corporation has generated a total shareholder return of 4.2% over three years, so most shareholders wouldn't be too disappointed. But they would probably prefer not to see CEO compensation far in excess of the median.
Steve Milligan is paid around the same as most CEOs of large companies.
We feel that earnings per share have been a bit disappointing, but and we don't think the total returns are amazing. We're not saying the CEO pay is too generous, but we'd venture the company should look to improve its business metrics (and share price) before paying any more. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Western Digital (free visualization of insider trades).
Important note: Western Digital 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.
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