Is Prudential plc’s (LON:PRU) CEO Being Overpaid?

Mike Wells became the CEO of Prudential plc (LON:PRU) in 2015. First, this article will compare CEO compensation with compensation at other large companies. After that, we will consider the growth in the business. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.

Check out our latest analysis for Prudential

How Does Mike Wells’s Compensation Compare With Similar Sized Companies?

Our data indicates that Prudential plc is worth UK£38.6b, and total annual CEO compensation is UK£9m. That’s a notable increase of 26% on last year. When we examined a group of companies with market caps over UK£6.2b, we found that their median CEO compensation was UK£4m.

As you can see, Mike Wells is paid more than the median CEO pay at large companies, in the same market. However, this does not necessarily mean Prudential plc is paying too much. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.

The graphic below shows how CEO compensation at Prudential has changed from year to year.

LSE:PRU CEO Compensation October 30th 18
LSE:PRU CEO Compensation October 30th 18

Is Prudential plc Growing?

Prudential plc saw earnings per share stay pretty flat over the last three years, albeit with a slight decrease. Its revenue is down -31% over last year.

Unfortunately there is a complete lack of earnings per share improvement, over three years. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO.

It could be important to check this free visual depiction of what analysts expect for the future.

Has Prudential plc Been A Good Investment?

Prudential plc has generated a total shareholder return of 11% 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.

In Summary…

We compared the total CEO remuneration paid by Prudential plc, and compared it to remuneration at a group of other large companies. We found that it pays well over the median amount paid in the benchmark group.

Earnings per share have not grown in three years, and the revenue growth fails to impress us.

While shareholder returns are acceptable, they don’t delight. It’s also worth noting total remuneration to the CEO has increased, year on year. So we think more research is needed, but we don’t think the CEO underpaid. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Prudential plc.

Or you might prefer this data-rich interactive visualization of historic revenue and earnings.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.