Stock Analysis

We Think Some Shareholders May Hesitate To Increase The PNC Financial Services Group, Inc.'s (NYSE:PNC) CEO Compensation

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The share price of The PNC Financial Services Group, Inc. (NYSE:PNC) has been growing in the past few years, however, the per-share earnings growth has been lacking, suggesting something is amiss. Some of these issues will occupy shareholders' minds as the AGM rolls around on 27 April 2021. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.

View our latest analysis for PNC Financial Services Group

Comparing The PNC Financial Services Group, Inc.'s CEO Compensation With the industry

According to our data, The PNC Financial Services Group, Inc. has a market capitalization of US$73b, and paid its CEO total annual compensation worth US$16m over the year to December 2020. That's slightly lower by 4.0% over the previous 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 industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$8.0m. This suggests that Bill Demchak is paid more than the median for the industry. What's more, Bill Demchak holds US$76m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component20202019Proportion (2020)
Salary US$1.2m US$1.1m 8%
Other US$15m US$15m 92%
Total CompensationUS$16m US$17m100%

Speaking on an industry level, nearly 42% of total compensation represents salary, while the remainder of 58% is other remuneration. It's interesting to note that PNC Financial Services Group 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.

NYSE:PNC CEO Compensation April 21st 2021

The PNC Financial Services Group, Inc.'s Growth

Over the last three years, The PNC Financial Services Group, Inc. has shrunk its earnings per share by 7.0% per year. In the last year, its revenue is down 9.2%.

Few shareholders would be pleased to read that EPS have declined. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has The PNC Financial Services Group, Inc. Been A Good Investment?

With a total shareholder return of 31% over three years, The PNC Financial Services Group, Inc. shareholders would, in general, be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.

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.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 1 warning sign for PNC Financial Services Group that investors should think about before committing capital to this stock.

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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