Shareholders Will Most Likely Find Cullen/Frost Bankers, Inc.'s (NYSE:CFR) CEO Compensation Acceptable

By
Simply Wall St
Published
April 22, 2021
NYSE:CFR
Source: Shutterstock

The share price of Cullen/Frost Bankers, Inc. (NYSE:CFR) has been growing in the past few years, however, the per-share earnings growth has been lacking, suggesting something is amiss. The upcoming AGM on 28 April 2021 may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.

See our latest analysis for Cullen/Frost Bankers

Comparing Cullen/Frost Bankers, Inc.'s CEO Compensation With the industry

Our data indicates that Cullen/Frost Bankers, Inc. has a market capitalization of US$7.1b, and total annual CEO compensation was reported as US$3.8m for the year to December 2020. That's a notable decrease of 20% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.0m.

For comparison, other companies in the same industry with market capitalizations ranging between US$4.0b and US$12b had a median total CEO compensation of US$4.8m. This suggests that Cullen/Frost Bankers remunerates its CEO largely in line with the industry average. Moreover, Phil Green also holds US$15m worth of Cullen/Frost Bankers stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20202019Proportion (2020)
Salary US$1.0m US$1.0m 27%
Other US$2.8m US$3.8m 73%
Total CompensationUS$3.8m US$4.8m100%

On an industry level, around 42% of total compensation represents salary and 58% is other remuneration. Cullen/Frost Bankers pays a modest slice of remuneration through salary, as compared to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

ceo-compensation
NYSE:CFR CEO Compensation April 23rd 2021

A Look at Cullen/Frost Bankers, Inc.'s Growth Numbers

Cullen/Frost Bankers, Inc. has reduced its earnings per share by 2.8% a year over the last three years. In the last year, its revenue is down 10%.

Its a bit disappointing to see that the company has failed to grow its EPS. 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 Cullen/Frost Bankers, Inc. Been A Good Investment?

Cullen/Frost Bankers, Inc. has not done too badly by shareholders, with a total return of 9.7%, over three years. It would be nice to see that metric improve in the future. As a result, investors in the company might be reluctant about agreeing to increase CEO pay in the future, before seeing an improvement on their returns.

In Summary...

Shareholder returns, while positive, should be looked at along with earnings, which have not grown at all recently. This makes us think the share price momentum may slow in the future. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.

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 Cullen/Frost Bankers that you should be aware of before investing.

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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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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