Most Shareholders Will Probably Find That The CEO Compensation For Prudential Financial, Inc. (NYSE:PRU) Is Reasonable

Key Insights

• Prudential Financial's Annual General Meeting to take place on 14th of May
• CEO Charlie Lowrey's total compensation includes salary of US$1.30m
• The overall pay is comparable to the industry average
• Prudential Financial's EPS declined by 4.0% over the past three years while total shareholder return over the past three years was 28%

Despite positive share price growth of 28% for Prudential Financial, Inc. (NYSE:PRU) over the last few years, earnings growth has been disappointing, which suggests something is amiss. The upcoming AGM on 14th of May may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.

Check out our latest analysis for Prudential Financial

How Does Total Compensation For Charlie Lowrey Compare With Other Companies In The Industry?

According to our data, Prudential Financial, Inc. has a market capitalization of US$42b, and paid its CEO total annual compensation worth US$19m over the year to December 2023. That's a slight decrease of 4.4% on the prior year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.3m.

In comparison with other companies in the American Insurance industry with market capitalizations over US$8.0b, the reported median total CEO compensation was US$15m. So it looks like Prudential Financial compensates Charlie Lowrey in line with the median for the industry. Moreover, Charlie Lowrey also holds US$21m worth of Prudential Financial stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	US$1.3m	US$1.3m	7%
Other	US$18m	US$19m	93%
Total Compensation	US$19m	US$20m	100%

On an industry level, around 14% of total compensation represents salary and 86% is other remuneration. In Prudential Financial's case, non-salary compensation represents a greater slice of total remuneration, 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.

Prudential Financial, Inc.'s Growth

Over the last three years, Prudential Financial, Inc. has shrunk its earnings per share by 4.0% per year. In the last year, its revenue is up 1.1%.

Few shareholders would be pleased to read that EPS have declined. The fairly low revenue growth fails to impress given that the EPS is down. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Prudential Financial, Inc. Been A Good Investment?

Prudential Financial, Inc. has served shareholders reasonably well, with a total return of 28% over three years. 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 CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 1 warning sign for Prudential Financial that investors should be aware of in a dynamic business environment.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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.