Brian Porter has been the CEO of The Bank of Nova Scotia (TSE:BNS) since 2013. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. After that, we will consider the growth in the business. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Brian Porter's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that The Bank of Nova Scotia has a market cap of CA$92b, and reported total annual CEO compensation of CA$13m for the year to October 2018. We think total compensation is more important but we note that the CEO salary is lower, at CA$1.2m. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. We looked at a group of companies with market capitalizations over CA$11b and the median CEO total compensation was CA$9.1m. There aren't very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.
It would therefore appear that The Bank of Nova Scotia pays Brian Porter more than the median CEO remuneration at large companies, in the same market. However, this fact alone doesn't mean the remuneration is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
You can see, below, how CEO compensation at Bank of Nova Scotia has changed over time.
Is The Bank of Nova Scotia Growing?
On average over the last three years, The Bank of Nova Scotia has grown earnings per share (EPS) by 5.7% each year (using a line of best fit). It achieved revenue growth of 8.1% over the last year.
I'm not particularly impressed by the revenue growth, but I'm happy with the modest EPS growth. It's clear the performance has been quite decent, but it it falls short of outstanding,based on this information. It could be important to check this free visual depiction of what analysts expect for the future.
Has The Bank of Nova Scotia Been A Good Investment?
The Bank of Nova Scotia has served shareholders reasonably well, with a total return of 22% over three years. 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.
We compared total CEO remuneration at The Bank of Nova Scotia with the amount paid at other large companies. We found that it pays well over the median amount paid in the benchmark group.
We generally prefer to see stronger EPS growth, and we're not particularly impressed with the total shareholder return, over the last three years. Considering this, we wouldn't want to see any big pay rises, although we'd stop short of calling the CEO compensation unfair. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Bank of Nova Scotia (free visualization of insider trades).
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.
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