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.
View our latest analysis for Sun Life Financial
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.
| Component | 2019 | 2018 | Proportion (2019) |
| Salary | CA$1.1m | CA$1.1m | 12% |
| Other | CA$8.5m | CA$8.6m | 88% |
| Total Compensation | CA$9.6m | CA$9.7m | 100% |
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.
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.
Promoted
If you’re looking to trade Sun Life Financial, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account.
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.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.