We Think Some Shareholders May Hesitate To Increase Royal Bank of Canada's (TSE:RY) CEO Compensation

Key Insights

• Royal Bank of Canada will host its Annual General Meeting on 11th of April
• CEO Dave McKay's total compensation includes salary of CA$1.50m
• The total compensation is 36% higher than the average for the industry
• Royal Bank of Canada's EPS grew by 9.6% over the past three years while total shareholder return over the past three years was 32%

CEO Dave McKay has done a decent job of delivering relatively good performance at Royal Bank of Canada (TSE:RY) recently. As shareholders go into the upcoming AGM on 11th of April, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. However, some shareholders may still be hesitant of being overly generous with CEO compensation.

See our latest analysis for Royal Bank of Canada

Comparing Royal Bank of Canada's CEO Compensation With The Industry

At the time of writing, our data shows that Royal Bank of Canada has a market capitalization of CA$192b, and reported total annual CEO compensation of CA$16m for the year to October 2023. That is, the compensation was roughly the same as last year. We think total compensation is more important but our data shows that the CEO salary is lower, at CA$1.5m.

For comparison, other companies in the Canadian Banks industry with market capitalizations above CA$11b, reported a median total CEO compensation of CA$12m. Hence, we can conclude that Dave McKay is remunerated higher than the industry median. Furthermore, Dave McKay directly owns CA$6.1m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	CA$1.5m	CA$1.5m	9%
Other	CA$15m	CA$15m	91%
Total Compensation	CA$16m	CA$16m	100%

On an industry level, roughly 11% of total compensation represents salary and 89% is other remuneration. It's interesting to note that Royal Bank of Canada 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.

Royal Bank of Canada's Growth

Over the past three years, Royal Bank of Canada has seen its earnings per share (EPS) grow by 9.6% per year. In the last year, its revenue is up 11%.

We think the revenue growth is good. And, while modest, the EPS growth is noticeable. So while performance isn't amazing, we think it really does seem quite respectable. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Royal Bank of Canada Been A Good Investment?

Royal Bank of Canada has generated a total shareholder return of 32% over three years, so most shareholders would be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

To Conclude...

Seeing that the company has put up a decent performance, only a few shareholders, if any at all, might have questions about the CEO pay in the upcoming AGM. Still, not all shareholders might be in favor of a pay raise to the CEO, seeing that they are already being paid higher than the industry.

Whatever your view on compensation, you might want to check if insiders are buying or selling Royal Bank of Canada shares (free trial).

Switching gears from Royal Bank of Canada, 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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.