We Take A Look At Why Western Alliance Bancorporation's (NYSE:WAL) CEO Compensation Is Well Earned

We have been pretty impressed with the performance at Western Alliance Bancorporation (NYSE:WAL) recently and CEO Ken Vecchione deserves a mention for their role in it. Shareholders will have this at the front of their minds in the upcoming AGM on 15 June 2021. It is likely that the focus will be on company strategy going forward as shareholders hear from the board and cast their votes on resolutions such as executive remuneration and other matters. We think the CEO has done a pretty decent job and we discuss why the CEO compensation is appropriate.

Check out our latest analysis for Western Alliance Bancorporation

Comparing Western Alliance Bancorporation's CEO Compensation With the industry

According to our data, Western Alliance Bancorporation has a market capitalization of US$11b, and paid its CEO total annual compensation worth US$6.3m over the year to December 2020. That's a notable increase of 19% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, 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 Western Alliance Bancorporation remunerates its CEO largely in line with the industry average. Furthermore, Ken Vecchione directly owns US$34m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2020	2019	Proportion (2020)
Salary	US$1.2m	US$1.1m	20%
Other	US$5.0m	US$4.1m	80%
Total Compensation	US$6.3m	US$5.3m	100%

On an industry level, around 43% of total compensation represents salary and 57% is other remuneration. It's interesting to note that Western Alliance Bancorporation allocates a smaller portion of compensation to salary in comparison 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.

Western Alliance Bancorporation's Growth

Over the past three years, Western Alliance Bancorporation has seen its earnings per share (EPS) grow by 22% per year. Its revenue is up 20% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Western Alliance Bancorporation Been A Good Investment?

Boasting a total shareholder return of 72% over three years, Western Alliance Bancorporation has done well by shareholders. 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.

In Summary...

Given the company's decent performance, the CEO remuneration policy might not be shareholders' central point of focus in the AGM. However, investors will get the chance to engage on key strategic initiatives and future growth opportunities for the company and set their longer-term expectations.

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 2 warning signs for Western Alliance Bancorporation that you should be aware of before investing.

Switching gears from Western Alliance Bancorporation, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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