Here's Why It's Unlikely That KeyCorp's (NYSE:KEY) CEO Will See A Pay Rise This Year

Key Insights

• KeyCorp's Annual General Meeting to take place on 9th of May
• Salary of US$1.20m is part of CEO Chris Gorman's total remuneration
• The total compensation is similar to the average for the industry
• KeyCorp's EPS declined by 24% over the past three years while total shareholder loss over the past three years was 25%

Shareholders will probably not be too impressed with the underwhelming results at KeyCorp (NYSE:KEY) recently. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 9th of May. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. We present the case why we think CEO compensation is out of sync with company performance.

Check out our latest analysis for KeyCorp

Comparing KeyCorp's CEO Compensation With The Industry

According to our data, KeyCorp has a market capitalization of US$14b, and paid its CEO total annual compensation worth US$10m over the year to December 2023. This means that the compensation hasn't changed much from last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.2m.

On comparing similar companies in the American Banks industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$12m. From this we gather that Chris Gorman is paid around the median for CEOs in the industry. What's more, Chris Gorman holds US$17m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	US$1.2m	US$1.2m	12%
Other	US$9.1m	US$9.3m	88%
Total Compensation	US$10m	US$10m	100%

On an industry level, roughly 45% of total compensation represents salary and 55% is other remuneration. It's interesting to note that KeyCorp 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 KeyCorp's Growth Numbers

Over the last three years, KeyCorp has shrunk its earnings per share by 24% per year. Its revenue is down 14% over the previous year.

Few shareholders would be pleased to read that EPS have declined. 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. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has KeyCorp Been A Good Investment?

With a three year total loss of 25% for the shareholders, KeyCorp would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 2 warning signs for KeyCorp that investors should look into moving forward.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.