Greg Becker has been the CEO of SVB Financial Group (NASDAQ:SIVB) since 2011. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we’ll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Greg Becker’s Compensation Compare With Similar Sized Companies?
Our data indicates that SVB Financial Group is worth US$7.8b, and total annual CEO compensation was reported as US$11m for the year to December 2019. That’s a notable increase of 37% on last year. While we always look at total compensation first, we note that the salary component is less, at US$995k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. When we examined a selection of companies with market caps ranging from US$4.0b to US$12b, we found the median CEO total compensation was US$7.7m.
Next, let’s break down remuneration compositions to understand how the industry and company compare with each other. Speaking on an industry level, we can see that nearly 45% of total compensation represents salary, while the remainder of 55% is other remuneration. Readers will want to know that SVB Financial Group pays a modest slice of remuneration through salary, as compared to the wider sector.
It would therefore appear that SVB Financial Group pays Greg Becker more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn’t mean the remuneration is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance. You can see, below, how CEO compensation at SVB Financial Group has changed over time.
Is SVB Financial Group Growing?
Over the last three years SVB Financial Group has grown its earnings per share (EPS) by an average of 41% per year (using a line of best fit). In the last year, its revenue is up 26%.
This shows that the company has improved itself over the last few years. Good news for shareholders. The combination of strong revenue growth with medium-term earnings per share improvement certainly points to the kind of growth I like to see. It could be important to check this free visual depiction of what analysts expect for the future.
Has SVB Financial Group Been A Good Investment?
Since shareholders would have lost about 21% over three years, some SVB Financial Group shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
We compared total CEO remuneration at SVB Financial Group with the amount paid at companies with a similar market capitalization. Our data suggests that it pays above the median CEO pay within that group.
However we must not forget that the EPS growth has been very strong over three years. However, the returns to investors are far less impressive, over the same period. This doesn’t look great when you consider CEO remuneration is up on last year. Considering the per share profit growth, but keeping in mind the weak returns, we’d need more time to form a view on CEO compensation. On another note, SVB Financial Group has 2 warning signs (and 1 which is a bit concerning) we think you should know about.
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.
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