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Is Lloyds Banking Group plc's (LON:LLOY) CEO Salary Justified?

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António de Sousa Horta-Osório became the CEO of Lloyds Banking Group plc (LON:LLOY) in 2011. First, this article will compare CEO compensation with compensation at other large companies. Then we'll look at a snap shot of the business growth. 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.

See our latest analysis for Lloyds Banking Group

How Does António de Sousa Horta-Osório's Compensation Compare With Similar Sized Companies?

Our data indicates that Lloyds Banking Group plc is worth UK£45b, and total annual CEO compensation is UK£6.3m. (This number is for the twelve months until December 2018). That's less than last year. We think total compensation is more important but we note that the CEO salary is lower, at UK£1.2m. We took a group of companies with market capitalizations over UK£6.1b, and calculated the median CEO total compensation to be UK£3.9m. There aren't very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.

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Thus we can conclude that António de Sousa Horta-Osório receives more in total compensation than the median of a group of large companies in the same market as Lloyds Banking Group plc. However, this doesn't necessarily mean the pay is too high. 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 Lloyds Banking Group has changed over time.

LSE:LLOY CEO Compensation, May 2nd 2019
LSE:LLOY CEO Compensation, May 2nd 2019

Is Lloyds Banking Group plc Growing?

On average over the last three years, Lloyds Banking Group plc has grown earnings per share (EPS) by 59% each year (using a line of best fit). In the last year, its revenue is down -1.1%.

This shows that the company has improved itself over the last few years. Good news for shareholders. Revenue growth is a real positive for growth, but ultimately profits are more important. It could be important to check this free visual depiction of what analysts expect for the future.

Has Lloyds Banking Group plc Been A Good Investment?

Lloyds Banking Group plc has served shareholders reasonably well, with a total return of 14% over three years. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

We compared total CEO remuneration at Lloyds Banking Group plc with the amount paid at other large companies. We found that it pays well over the median amount paid in the benchmark group.

However, the earnings per share growth over three years is certainly impressive. Looking at the same time period, we think that the shareholder returns are respectable. So, considering the EPS growth we do not wish to criticize the level of CEO compensation, though we'd recommend further research on management. So you may want to check if insiders are buying Lloyds Banking Group shares with their own money (free access).

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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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.