Greg Carmichael became the CEO of Fifth Third Bancorp (NASDAQ:FITB) in 2015, 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 assess whether Fifth Third Bancorp pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
How Does Total Compensation For Greg Carmichael Compare With Other Companies In The Industry?
Our data indicates that Fifth Third Bancorp has a market capitalization of US$17b, and total annual CEO compensation was reported as US$9.0m for the year to December 2019. That's a notable decrease of 19% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.1m.
On comparing similar companies in the industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$13m. In other words, Fifth Third Bancorp pays its CEO lower than the industry median. Furthermore, Greg Carmichael directly owns US$15m worth of shares in the company, implying that they are deeply invested in the company's success.
Speaking on an industry level, nearly 43% of total compensation represents salary, while the remainder of 57% is other remuneration. It's interesting to note that Fifth Third Bancorp 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.
A Look at Fifth Third Bancorp's Growth Numbers
Over the last three years, Fifth Third Bancorp has shrunk its earnings per share by 9.0% per year. In the last year, its revenue is down 9.5%.
The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Fifth Third Bancorp Been A Good Investment?
Given the total shareholder loss of 6.4% over three years, many shareholders in Fifth Third Bancorp are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
As we noted earlier, Fifth Third Bancorp pays its CEO lower than the norm for similar-sized companies belonging to the same industry. Over the last three years, shareholder returns have been downright disappointing, and EPSgrowth has been equally disappointing. Although we wouldn’t say CEO compensation is high, it’s tough to foresee shareholders warming up to thoughts of a bump anytime soon.
CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 1 warning sign for Fifth Third Bancorp that investors should think about before committing capital to this stock.
Important note: Fifth Third Bancorp 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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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.
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