Here's Why Shareholders May Want To Be Cautious With Increasing Lloyds Banking Group plc's (LON:LLOY) CEO Pay Packet

Key Insights

• Lloyds Banking Group will host its Annual General Meeting on 16th of May
• Salary of UK£1.14m is part of CEO Charlie Nunn's total remuneration
• The overall pay is 60% above the industry average
• Lloyds Banking Group's total shareholder return over the past three years was 33% while its EPS grew by 38% over the past three years

Under the guidance of CEO Charlie Nunn, Lloyds Banking Group plc (LON:LLOY) has performed reasonably well recently. As shareholders go into the upcoming AGM on 16th of May, 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.

Check out our latest analysis for Lloyds Banking Group

How Does Total Compensation For Charlie Nunn Compare With Other Companies In The Industry?

Our data indicates that Lloyds Banking Group plc has a market capitalization of UK£34b, and total annual CEO compensation was reported as UK£3.7m for the year to December 2023. This means that the compensation hasn't changed much from last year. We think total compensation is more important but our data shows that the CEO salary is lower, at UK£1.1m.

In comparison with other companies in the British Banks industry with market capitalizations over UK£6.4b, the reported median total CEO compensation was UK£2.3m. Hence, we can conclude that Charlie Nunn is remunerated higher than the industry median. Moreover, Charlie Nunn also holds UK£3.2m worth of Lloyds Banking Group stock directly under their own name.

Component	2023	2022	Proportion (2023)
Salary	UK£1.1m	UK£1.1m	31%
Other	UK£2.5m	UK£2.6m	69%
Total Compensation	UK£3.7m	UK£3.8m	100%

Talking in terms of the industry, salary represented approximately 44% of total compensation out of all the companies we analyzed, while other remuneration made up 56% of the pie. It's interesting to note that Lloyds Banking Group allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at Lloyds Banking Group plc's Growth Numbers

Lloyds Banking Group plc's earnings per share (EPS) grew 38% per year over the last three years. In the last year, its revenue is up 18%.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. 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 Lloyds Banking Group plc Been A Good Investment?

We think that the total shareholder return of 33%, over three years, would leave most Lloyds Banking Group plc shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

The company's decent performance might have made most shareholders happy, possibly making CEO remuneration the least of the concerns to be discussed in the upcoming AGM. However, any decision to raise CEO pay might be met with some objections from the shareholders given that the CEO is already paid higher than the industry average.

CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 1 warning sign for Lloyds Banking Group that investors should look into moving forward.

Switching gears from Lloyds Banking 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. 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.