Is Barclays PLC (LON:BARC) Excessively Paying Its CEO?

In 2015, Jes Staley was appointed CEO of Barclays PLC (LON:BARC). First, this article will compare CEO compensation with compensation at other large companies. Next, we’ll consider growth that the business demonstrates. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.

Check out our latest analysis for Barclays

How Does Jes Staley’s Compensation Compare With Similar Sized Companies?

Our data indicates that Barclays PLC is worth UK£23b, and total annual CEO compensation was reported as UK£5.9m for the year to December 2019. That’s a notable increase of 76% on last year. We think total compensation is more important but we note that the CEO salary is lower, at UK£2.4m. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. We looked at a group of companies with market capitalizations over UK£6.3b and the median CEO total compensation was UK£3.4m. Once you start looking at very large companies, you need to take a broader range, because there simply aren’t that many of them.

Now let’s take a look at the pay mix on an industry and company level to gain a better understanding of where Barclays stands. On an industry level, roughly 44% of total compensation represents salary and 56% is other remuneration. Barclays is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation

As you can see, Jes Staley is paid more than the median CEO pay at large companies, in the same market. However, this does not necessarily mean Barclays PLC is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance. The graphic below shows how CEO compensation at Barclays has changed from year to year.

LSE:BARC CEO Compensation June 6th 2020
LSE:BARC CEO Compensation June 6th 2020

Is Barclays PLC Growing?

Barclays PLC has seen earnings per share (EPS) move positively by an average of 25% a year, over the last three years (using a line of best fit). It saw its revenue drop 2.1% over the last year.

This demonstrates that the company has been improving recently. A good result. The lack of revenue growth isn’t ideal, but it is the bottom line that counts most in business. Shareholders might be interested in this free visualization of analyst forecasts.

Has Barclays PLC Been A Good Investment?

With a three year total loss of 32%, Barclays PLC would certainly have some dissatisfied shareholders. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary…

We compared the total CEO remuneration paid by Barclays PLC, 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.

However, the earnings per share growth over three years is certainly impressive. 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. While EPS is moving in the right direction, we’d say shareholders would want better returns before the CEO is paid much more. On another note, we’ve spotted 3 warning signs for Barclays that investors should look into moving forward.

Important note: Barclays may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.

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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. Thank you for reading.