Is PacWest Bancorp (NASDAQ:PACW) Overpaying Its CEO?

Matt Wagner became the CEO of PacWest Bancorp (NASDAQ:PACW) in 2000. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we’ll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.

View our latest analysis for PacWest Bancorp

How Does Matt Wagner’s Compensation Compare With Similar Sized Companies?

Our data indicates that PacWest Bancorp is worth US$4.4b, and total annual CEO compensation was reported as US$6.2m for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$1.0m. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. We examined companies with market caps from US$2.0b to US$6.4b, and discovered that the median CEO total compensation of that group was US$5.1m.

So Matt Wagner receives a similar amount to the median CEO pay, amongst the companies we looked at. While this data point isn’t particularly informative alone, it gains more meaning when considered with business performance. You might want to check this free visual report on analyst forecasts for future earnings.

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

NasdaqGS:PACW CEO Compensation, September 17th 2019
NasdaqGS:PACW CEO Compensation, September 17th 2019

Is PacWest Bancorp Growing?

On average over the last three years, PacWest Bancorp has grown earnings per share (EPS) by 13% each year (using a line of best fit). In the last year, its revenue is up 4.1%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It’s good to see a bit of revenue growth, as this suggests the business is able to grow sustainably.

Has PacWest Bancorp Been A Good Investment?

With a total shareholder return of 3.8% over three years, PacWest Bancorp has done okay by shareholders. 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…

Matt Wagner is paid around the same as most CEOs of similar size companies.

Shareholder returns could be better but shareholders would be pleased with the positive EPS growth. So upon reflection one could argue that the CEO pay is quite reasonable. Shareholders may want to check for free if PacWest Bancorp insiders are buying or selling shares.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.