Here's Why We Think Moody's Corporation's (NYSE:MCO) CEO Compensation Looks Fair for the time being

Key Insights

• Moody's' Annual General Meeting to take place on 15th of April
• Salary of US$1.05m is part of CEO Rob Fauber's total remuneration
• The total compensation is similar to the average for the industry
• Moody's' total shareholder return over the past three years was 22% while its EPS was down 1.2% over the past three years

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Performance at Moody's Corporation (NYSE:MCO) has been reasonably good and CEO Rob Fauber has done a decent job of steering the company in the right direction. This is something shareholders will keep in mind as they cast their votes on company resolutions such as executive remuneration in the upcoming AGM on 15th of April. Here is our take on why we think the CEO compensation looks appropriate.

See our latest analysis for Moody's

Comparing Moody's Corporation's CEO Compensation With The Industry

At the time of writing, our data shows that Moody's Corporation has a market capitalization of US$72b, and reported total annual CEO compensation of US$17m for the year to December 2024. We note that's an increase of 18% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.1m.

In comparison with other companies in the American Capital Markets industry with market capitalizations over US$8.0b, the reported median total CEO compensation was US$17m. This suggests that Moody's remunerates its CEO largely in line with the industry average. Moreover, Rob Fauber also holds US$25m worth of Moody's stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

On an industry level, roughly 11% of total compensation represents salary and 89% is other remuneration. It's interesting to note that Moody's 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.

A Look at Moody's Corporation's Growth Numbers

Over the last three years, Moody's Corporation has shrunk its earnings per share by 1.2% per year. It achieved revenue growth of 20% over the last year.

Investors would be a bit wary of companies that have lower EPS But on the other hand, revenue growth is strong, suggesting a brighter future. It's hard to reach a conclusion about business performance right now. This may be one to watch. 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 Moody's Corporation Been A Good Investment?

Moody's Corporation has generated a total shareholder return of 22% over three years, so most shareholders would be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

To Conclude...

The overall company performance has been commendable, however there are still areas for improvement. We reckon that there are some shareholders who may be hesitant to increase CEO pay further until EPS growth starts to improve, despite the robust revenue growth.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We did our research and spotted 2 warning signs for Moody's that investors should look into moving forward.

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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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.