Yahoo Finance Key Things To Understand About Eaton Vance's (NYSE:EV) CEO Pay Cheque
Tom Faust became the CEO of Eaton Vance Corp. (NYSE:EV) in 2007, 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.
Check out our latest analysis for Eaton Vance
How Does Total Compensation For Tom Faust Compare With Other Companies In The Industry?
At the time of writing, our data shows that Eaton Vance Corp. has a market capitalization of US$7.4b, and reported total annual CEO compensation of US$11m for the year to October 2020. We note that's a decrease of 18% compared to last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$550k.
On examining similar-sized companies in the industry with market capitalizations between US$4.0b and US$12b, we discovered that the median CEO total compensation of that group was US$8.2m. Hence, we can conclude that Tom Faust is remunerated higher than the industry median. Furthermore, Tom Faust directly owns US$222m worth of shares in the company, implying that they are deeply invested in the company's success.
Component | 2020 | 2019 | Proportion (2020) |
Salary | US$550k | US$550k | 5% |
Other | US$10m | US$13m | 95% |
Total Compensation | US$11m | US$13m | 100% |
On an industry level, around 14% of total compensation represents salary and 86% is other remuneration. It's interesting to note that Eaton Vance allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
A Look at Eaton Vance Corp.'s Growth Numbers
Over the last three years, Eaton Vance Corp. has shrunk its earnings per share by 21% per year. It achieved revenue growth of 2.8% over the last year.
The decline in EPS is a bit concerning. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Eaton Vance Corp. Been A Good Investment?
Boasting a total shareholder return of 36% over three years, Eaton Vance Corp. has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
In Summary...
As previously discussed, Tom is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. The company isn't growing EPS, but shareholder returns have been impressive over the last three years. So while we don't think, Tom is paid too much, shareholders may want to see some positive EPS growth before pay rises are given out.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We did our research and spotted 5 warning signs for Eaton Vance that investors should look into moving forward.
Important note: Eaton Vance is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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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