Yahoo Finance Does Royal Bank of Canada’s (TSE:RY) CEO Pay Compare Well With Peers?
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Dave McKay has been the CEO of Royal Bank of Canada (TSE:RY) since 2014. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. Then we’ll look at a snap shot of the business growth. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.
See our latest analysis for Royal Bank of Canada
How Does Dave McKay’s Compensation Compare With Similar Sized Companies?
Our data indicates that Royal Bank of Canada is worth CA$144b, and total annual CEO compensation is CA$13m. (This is based on the year to 2017). We think total compensation is more important but we note that the CEO salary is lower, at CA$1.5m. We took a group of companies with market capitalizations over CA$11b, and calculated the median CEO compensation to be CA$8.5m. Once you start looking at very large companies, you need to take a broader range, because there simply aren’t that many of them.
As you can see, Dave McKay is paid more than the median CEO pay at large companies, in the same market. However, this does not necessarily mean Royal Bank of Canada is paying too much. 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 Royal Bank of Canada has changed over time.
Is Royal Bank of Canada Growing?
Over the last three years Royal Bank of Canada has grown its earnings per share (EPS) by an average of 7.6% per year (using a line of best fit). Its revenue is up 4.4% over last year.
I would argue that the improvement in revenue isn’t particularly impressive, but it is good to see modest EPS growth. Considering these factors I’d say performance has been pretty decent, though not amazing. Shareholders might be interested in this free visualization of analyst forecasts.
Has Royal Bank of Canada Been A Good Investment?
Boasting a total shareholder return of 63% over three years, Royal Bank of Canada has done well by shareholders. 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…
We compared total CEO remuneration at Royal Bank of Canada with the amount paid at other large companies. Our data suggests that it pays above the median CEO pay within that group.
One might like to have seen stronger growth, but shareholder returns have been pleasing, over the last three years. As a result of the juicy return to investors, the CEO remuneration may well be quite reasonable. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Royal Bank of Canada (free visualization of insider trades).
Important note: Royal Bank of Canada 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.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
