Stock Analysis

Does Sun Life Financial's (TSE:SLF) CEO Salary Compare Well With Industry Peers?

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Dean Connor became the CEO of Sun Life Financial Inc. (TSE:SLF) in 2011, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Sun Life Financial.

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Comparing Sun Life Financial Inc.'s CEO Compensation With the industry

At the time of writing, our data shows that Sun Life Financial Inc. has a market capitalization of CA$35b, and reported total annual CEO compensation of CA$9.6m for the year to December 2019. That's mostly flat as compared to the prior year's compensation. We think total compensation is more important but our data shows that the CEO salary is lower, at CA$1.1m.

In comparison with other companies in the industry with market capitalizations over CA$10b , the reported median total CEO compensation was CA$8.4m. This suggests that Sun Life Financial remunerates its CEO largely in line with the industry average. Furthermore, Dean Connor directly owns CA$5.6m worth of shares in the company, implying that they are deeply invested in the company's success.

Component20192018Proportion (2019)
Salary CA$1.1m CA$1.1m 12%
Other CA$8.5m CA$8.6m 88%
Total CompensationCA$9.6m CA$9.7m100%

On an industry level, roughly 21% of total compensation represents salary and 79% is other remuneration. In Sun Life Financial's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

TSX:SLF CEO Compensation November 24th 2020

A Look at Sun Life Financial Inc.'s Growth Numbers

Over the last three years, Sun Life Financial Inc. has shrunk its earnings per share by 2.3% per year. It achieved revenue growth of 2.2% over the last year.

The lack of EPS growth is certainly unimpressive. The fairly low revenue growth fails to impress given that the EPS is down. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Sun Life Financial Inc. Been A Good Investment?

With a total shareholder return of 31% over three years, Sun Life Financial Inc. shareholders would, in general, be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

In Summary...

As we noted earlier, Sun Life Financial pays its CEO in line with similar-sized companies belonging to the same industry. Sun Life Financial has had a tough time in recent years, with declining EPS growth, and although shareholder returns are stable, they are hardly worth celebrating. These figures do not go well against CEO compensation, which is more or less equal to the industry median. We wouldn't go as far as saying CEO compensation is inappropriate, but we don't think the executive is underpaid.

If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Sun Life Financial.

Important note: Sun Life Financial is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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