Yahoo Finance Is The Bank of Nova Scotia's (TSE:BNS) CEO Being Overpaid?
In 2013 Brian Porter was appointed CEO of The Bank of Nova Scotia (TSE:BNS). 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. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.
See our latest analysis for Bank of Nova Scotia
How Does Brian Porter's Compensation Compare With Similar Sized Companies?
Our data indicates that The Bank of Nova Scotia is worth CA$65b, and total annual CEO compensation was reported as CA$13m for the year to October 2019. That's actually a decrease on the year before. While we always look at total compensation first, we note that the salary component is less, at CA$1.3m. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. We took a group of companies with market capitalizations over CA$11b, and calculated the median CEO total compensation to be CA$9.4m. (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).
Now let's take a look at the pay mix on an industry and company level to gain a better understanding of where Bank of Nova Scotia stands. On a sector level, around 11% of total compensation represents salary and 89% is other remuneration. Bank of Nova Scotia does not set aside a larger portion of remuneration in the form of salary, maintaining the same rate as the wider market.
Thus we can conclude that Brian Porter receives more in total compensation than the median of a group of large companies in the same market as The Bank of Nova Scotia. 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 Bank of Nova Scotia has changed over time.
Is The Bank of Nova Scotia Growing?
The Bank of Nova Scotia has seen earnings per share (EPS) move positively by an average of 2.9% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 6.7%.
I'd prefer higher revenue growth, but the modest improvement in EPS is good. Considering these factors I'd say performance has been pretty decent, though not amazing. You might want to check this free visual report on analyst forecasts for future earnings.
Has The Bank of Nova Scotia Been A Good Investment?
With a three year total loss of 22%, The Bank of Nova Scotia would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
In Summary...
We compared the total CEO remuneration paid by The Bank of Nova Scotia, and compared it to remuneration at a group of other large companies. As discussed above, we discovered that the company pays more than the median of that group.
While we have not been overly impressed by the business performance, the shareholder returns, over three years, have been disappointing. Although we'd stop short of calling it inappropriate, we think the CEO compensation is probably more on the generous side of things. Taking a breather from CEO compensation, we've spotted 2 warning signs for Bank of Nova Scotia (of which 1 is potentially serious!) you should know about in order to have a holistic understanding of the stock.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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.
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