Yahoo Finance Here's What We Learned About The CEO Pay At Commonwealth Bank of Australia (ASX:CBA)
This article will reflect on the compensation paid to Matt Comyn who has served as CEO of Commonwealth Bank of Australia (ASX:CBA) since 2018. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
See our latest analysis for Commonwealth Bank of Australia
How Does Total Compensation For Matt Comyn Compare With Other Companies In The Industry?
According to our data, Commonwealth Bank of Australia has a market capitalization of AU$145b, and paid its CEO total annual compensation worth AU$5.7m over the year to June 2020. Notably, that's an increase of 29% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at AU$2.2m.
On comparing similar companies in the industry with market capitalizations above AU$10b, we found that the median total CEO compensation was AU$4.3m. Hence, we can conclude that Matt Comyn is remunerated higher than the industry median. What's more, Matt Comyn holds AU$8.9m 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$2.2m | AU$2.2m | 38% |
Other | AU$3.5m | AU$2.2m | 62% |
Total Compensation | AU$5.7m | AU$4.4m | 100% |
On an industry level, roughly 64% of total compensation represents salary and 36% is other remuneration. Commonwealth Bank of Australia sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
A Look at Commonwealth Bank of Australia's Growth Numbers
Over the last three years, Commonwealth Bank of Australia has shrunk its earnings per share by 12% per year. It saw its revenue drop 4.1% over the last year.
The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. 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 Commonwealth Bank of Australia Been A Good Investment?
With a total shareholder return of 29% over three years, Commonwealth Bank of Australia shareholders would, in general, be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.
To Conclude...
As we noted earlier, Commonwealth Bank of Australia pays its CEO higher than the norm for similar-sized companies belonging to the same industry. Meanwhile, EPS has not been growing sufficiently to impress us, over the last three years. And shareholder returns are decent but not great. So you can understand why we do not think CEO compensation is particularly modest!
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've identified 1 warning sign for Commonwealth Bank of Australia that investors should be aware of in a dynamic business environment.
Switching gears from Commonwealth Bank of Australia, 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.
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