Brian Moynihan has been the CEO of Bank of America Corporation (NYSE:BAC) since 2010. First, this article will compare CEO compensation with compensation at other large companies. Then we'll look at a snap shot of the business growth. 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 Moynihan's Compensation Compare With Similar Sized Companies?
According to our data, Bank of America Corporation has a market capitalization of US$300b, and paid its CEO total annual compensation worth US$23m over the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$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 US$8.0b, and calculated the median CEO total compensation to be US$11m. (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).
As you can see, Brian Moynihan is paid more than the median CEO pay at large companies, in the same market. However, this does not necessarily mean Bank of America Corporation is paying too much. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
The graphic below shows how CEO compensation at Bank of America has changed from year to year.
Is Bank of America Corporation Growing?
On average over the last three years, Bank of America Corporation has grown earnings per share (EPS) by 22% each year (using a line of best fit). Its revenue is down 3.3% over last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. It could be important to check this free visual depiction of what analysts expect for the future.
Has Bank of America Corporation Been A Good Investment?
Boasting a total shareholder return of 48% over three years, Bank of America Corporation has done well by shareholders. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
We compared the total CEO remuneration paid by Bank of America Corporation, and compared it to remuneration at a group of other large companies. Our data suggests that it pays above the median CEO pay within that group.
Importantly, though, the company has impressed with its earnings per share growth, over three years. In addition, shareholders have done well over the same time period. Considering this fine result for shareholders, we daresay the CEO compensation might be apt. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Bank of America (free visualization of insider trades).
If you want to buy a stock that is better than Bank of America, 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 firstname.lastname@example.org. 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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