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How Does Bendigo and Adelaide Bank's (ASX:BEN) CEO Pay Compare With Company Performance?

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Marnie Baker has been the CEO of Bendigo and Adelaide Bank Limited (ASX:BEN) since 2018, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether Bendigo and Adelaide Bank pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for Bendigo and Adelaide Bank

How Does Total Compensation For Marnie Baker Compare With Other Companies In The Industry?

According to our data, Bendigo and Adelaide Bank Limited has a market capitalization of AU$5.0b, and paid its CEO total annual compensation worth AU$2.2m over the year to June 2020. That's a slight decrease of 4.9% on the prior year. We note that the salary portion, which stands at AU$1.21m constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the same industry with market capitalizations ranging between AU$2.6b and AU$8.3b had a median total CEO compensation of AU$2.1m. This suggests that Bendigo and Adelaide Bank remunerates its CEO largely in line with the industry average. What's more, Marnie Baker holds AU$9.7m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component

2020

2019

Proportion (2020)

Salary

AU$1.2m

AU$1.2m

56%

Other

AU$957k

AU$1.1m

44%

Total Compensation

AU$2.2m

AU$2.3m

100%

On an industry level, roughly 65% of total compensation represents salary and 35% is other remuneration. Bendigo and Adelaide Bank pays a modest slice of remuneration through salary, as compared to the broader industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

ceo-compensation
ceo-compensation

Bendigo and Adelaide Bank Limited's Growth

Over the last three years, Bendigo and Adelaide Bank Limited has shrunk its earnings per share by 25% per year. In the last year, its revenue is down 7.2%.

Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Bendigo and Adelaide Bank Limited Been A Good Investment?

Since shareholders would have lost about 5.8% over three years, some Bendigo and Adelaide Bank Limited investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

As previously discussed, Marnie is compensated close to the median for companies of its size, and which belong to the same industry. In the meantime, the company has reported declining EPS growth and shareholder returns over the last three years. It's tough to call out the compensation as inappropriate, but shareholders might not favor a raise before company performance improves.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 5 warning signs for Bendigo and Adelaide Bank you should be aware of, and 1 of them is concerning.

Switching gears from Bendigo and Adelaide Bank, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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