This article will reflect on the compensation paid to Jeff Jones who has served as CEO of H&R Block, Inc. (NYSE:HRB) since 2017. This analysis will also assess whether H&R Block pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Comparing H&R Block, Inc.'s CEO Compensation With the industry
Our data indicates that H&R Block, Inc. has a market capitalization of US$3.7b, and total annual CEO compensation was reported as US$6.9m for the year to April 2020. We note that's a decrease of 19% compared to last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.0m.
For comparison, other companies in the same industry with market capitalizations ranging between US$2.0b and US$6.4b had a median total CEO compensation of US$1.7m. Hence, we can conclude that Jeff Jones is remunerated higher than the industry median. What's more, Jeff Jones holds US$4.2m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
On an industry level, roughly 18% of total compensation represents salary and 82% is other remuneration. It's interesting to note that H&R Block allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
H&R Block, Inc.'s Growth
H&R Block, Inc. has reduced its earnings per share by 14% a year over the last three years. The trailing twelve months of revenue was pretty much the same as the prior period.
Overall this is not a very positive result for shareholders. And the flat revenue hardly impresses. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has H&R Block, Inc. Been A Good Investment?
Since shareholders would have lost about 16% over three years, some H&R Block, Inc. investors would surely be feeling negative emotions. So shareholders would probably want the company to be lessto generous with CEO compensation.
As we noted earlier, H&R Block pays its CEO higher than the norm for similar-sized companies belonging to the same industry. Unfortunately, this doesn't look great when you see shareholder returns have been negative over the last three years. What's equally worrying is that the company isn't growing by our analysis. Understandably, the company's shareholders might have some questions about the CEO's remuneration, given the disappointing performance.
CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 5 warning signs for H&R Block (2 are significant!) that you should be aware of before investing here.
Important note: H&R Block is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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This article by Simply Wall St is general in nature. 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.
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