Roy Gori became the CEO of Manulife Financial Corporation (TSE:MFC) in 2017. First, this article will compare CEO compensation with compensation at other large companies. Next, we'll consider growth that the business demonstrates. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.
How Does Roy Gori's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Manulife Financial Corporation has a market cap of CA$35b, and reported total annual CEO compensation of CA$15m for the year to December 2019. We note that's an increase of 13% above last year. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at CA$1.5m. 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. Once you start looking at very large companies, you need to take a broader range, because there simply aren't that many of them.
Next, let's break down remuneration compositions to understand how the industry and company compare with each other. On an industry level, roughly 18% of total compensation represents salary and 82% is other remuneration. Readers will want to know that Manulife Financial pays a modest slice of remuneration through salary, as compared to the wider sector.
It would therefore appear that Manulife Financial Corporation pays Roy Gori 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 a visual representation of the CEO compensation at Manulife Financial, below.
Is Manulife Financial Corporation Growing?
On average over the last three years, Manulife Financial Corporation has seen earnings per share (EPS) move in a favourable direction by 26% each year (using a line of best fit). Its revenue is up 109% over last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. It could be important to check this free visual depiction of what analysts expect for the future.
Has Manulife Financial Corporation Been A Good Investment?
Given the total loss of 12% over three years, many shareholders in Manulife Financial Corporation are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
We examined the amount Manulife Financial Corporation pays its CEO, and compared it to the amount paid by other large companies. We found that it pays well over the median amount paid in the benchmark group.
However we must not forget that the EPS growth has been very strong over three years. Having said that, shareholders may be disappointed with the weak returns over the last three years. This contrasts with the growth in CEO remuneration, in the last year. Considering positive per-share earnings movement, but keeping in mind the weak returns, we'd need more time to form a view on CEO compensation. On another note, we've spotted 4 warning signs for Manulife Financial that investors should look into moving forward.
If you want to buy a stock that is better than Manulife Financial, this free list of high return, low debt companies is a great place to look.
If you spot an error that warrants correction, please contact the editor at email@example.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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