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David Zalman became the CEO of Prosperity Bancshares, Inc. (NYSE:PB) in 2001. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does David Zalman’s Compensation Compare With Similar Sized Companies?
Our data indicates that Prosperity Bancshares, Inc. is worth US$5.1b, and total annual CEO compensation is US$2.4m. (This number is for the twelve months until 2017). We think total compensation is more important but we note that the CEO salary is lower, at US$927k. We looked at a group of companies with market capitalizations from US$4.0b to US$12b, and the median CEO compensation was US$6.4m.
Most shareholders would consider it a positive that David Zalman takes less compensation than the CEOs of most similar size companies, leaving more for shareholders. While this is a good thing, you’ll need to understand the business better before you can form an opinion.
You can see, below, how CEO compensation at Prosperity Bancshares has changed over time.
Is Prosperity Bancshares, Inc. Growing?
Over the last three years Prosperity Bancshares, Inc. has grown its earnings per share (EPS) by an average of 3.1% per year (using a line of best fit). It achieved revenue growth of 1.4% over the last year.
I would argue that the improvement in revenue isn’t particularly impressive, but it is good to see modest EPS growth. It’s clear the performance has been quite decent, but it it falls short of outstanding,based on this information. Shareholders might be interested in this free visualization of analyst forecasts.
Has Prosperity Bancshares, Inc. Been A Good Investment?
I think that the total shareholder return of 93%, over three years, would leave most Prosperity Bancshares, Inc. shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
It appears that Prosperity Bancshares, Inc. remunerates its CEO below most similar sized companies.
David Zalman receives relatively low remuneration compared to similar sized companies. And the returns to shareholders were great, over the last few years. We would like to see EPS growth, but in our view it seems the CEO is modestly remunerated. So you may want to check if insiders are buying Prosperity Bancshares shares with their own money (free access).
Important note: Prosperity Bancshares may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.