Bill Demchak has been the CEO of The PNC Financial Services Group, Inc. (NYSE:PNC) since 2013. This analysis aims first to contrast CEO compensation with other large companies. Next, we’ll consider growth that the business demonstrates. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Bill Demchak’s Compensation Compare With Similar Sized Companies?
According to our data, The PNC Financial Services Group, Inc. has a market capitalization of US$58b, and pays its CEO total annual compensation worth US$14m. (This number is for the twelve months until December 2017). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$1.1m. We took a group of companies with market capitalizations over US$8.0b, and calculated the median CEO compensation to be US$11m. (We took a wide range because the CEOs of massive companies tend to be paid similar amounts – even though some are quite a bit bigger than others).
Thus we can conclude that Bill Demchak receives more in total compensation than the median of a group of large companies in the same market as The PNC Financial Services Group, Inc.. However, this doesn’t necessarily mean the pay is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
The graphic below shows how CEO compensation at PNC Financial Services Group has changed from year to year.
Is The PNC Financial Services Group, Inc. Growing?
Over the last three years The PNC Financial Services Group, Inc. has grown its earnings per share (EPS) by an average of 19% per year (using a line of best fit). In the last year, its revenue is up 5.3%.
This demonstrates that the company has been improving recently. A good result. It’s nice to see a little revenue growth, as this is consistent with healthy business conditions. Shareholders might be interested in this free visualization of analyst forecasts.
Has The PNC Financial Services Group, Inc. Been A Good Investment?
I think that the total shareholder return of 56%, over three years, would leave most The PNC Financial Services Group, Inc. shareholders smiling. This strong performance might mean some shareholders don’t mind if the CEO were to be paid more than is normal for a company of its size.
We compared total CEO remuneration at The PNC Financial Services Group, Inc. with the amount paid at other large companies. We found that it pays well over the median amount paid in the benchmark group.
However we must not forget that the EPS growth has been very strong over three years. On top of that, in the same period, returns to shareholders have been great. So, considering this good performance, the CEO compensation may be quite appropriate. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at PNC Financial Services Group.
Important note: PNC Financial Services Group 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.
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