Ellen Alemany has been the CEO of CIT Group Inc. (NYSE:CIT) since 2016, and this article will examine the executive’s compensation with respect to the overall performance of the company. This analysis will also assess whether CIT Group pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Comparing CIT Group Inc.’s CEO Compensation With the industry
At the time of writing, our data shows that CIT Group Inc. has a market capitalization of US$2.1b, and reported total annual CEO compensation of US$8.3m for the year to December 2019. We note that’s a small decrease of 6.9% on last year. While this analysis focuses on total compensation, it’s worth acknowledging that the salary portion is lower, valued at US$1.0m.
On comparing similar companies from the same industry with market caps ranging from US$1.0b to US$3.2b, we found that the median CEO total compensation was US$3.0m. This suggests that Ellen Alemany is paid more than the median for the industry. Moreover, Ellen Alemany also holds US$5.4m worth of CIT Group stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Talking in terms of the industry, salary represented approximately 43% of total compensation out of all the companies we analyzed, while other remuneration made up 57% of the pie. It’s interesting to note that CIT Group allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
CIT Group Inc.’s Growth
Over the last three years, CIT Group Inc. has shrunk its earnings per share by 2.5% per year. It saw its revenue drop 31% over the last year.
Its a bit disappointing to see that the company has failed to grow its EPS. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn’t really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company’s future earnings..
Has CIT Group Inc. Been A Good Investment?
With a three year total loss of 48% for the shareholders, CIT Group Inc. would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be lessto generous with CEO compensation.
As previously discussed, Ellen is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. This doesn’t look good against shareholder returns, which have been negative for the past three years. Arguably worse, we’ve been waiting for positive EPS growth for the last three years. Considering such poor performance, we think shareholders might be concerned if the CEO’s compensation were to grow.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We’ve identified 3 warning signs for CIT Group that investors should be aware of in a dynamic business environment.
Switching gears from CIT Group, 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.
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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.
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