This article will reflect on the compensation paid to Tom Faust who has served as CEO of Eaton Vance Corp. (NYSE:EV) since 2007. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Eaton Vance.
See our latest analysis for Eaton Vance
Comparing Eaton Vance Corp.’s CEO Compensation With the industry
Our data indicates that Eaton Vance Corp. has a market capitalization of US$7.3b, and total annual CEO compensation was reported as US$11m for the year to October 2020. That’s a notable decrease of 18% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$550k.
In comparison with other companies in the industry with market capitalizations ranging from US$4.0b to US$12b, the reported median CEO total compensation was US$8.2m. Accordingly, our analysis reveals that Eaton Vance Corp. pays Tom Faust north of the industry median. Moreover, Tom Faust also holds US$221m worth of Eaton Vance stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
On an industry level, around 14% of total compensation represents salary and 86% is other remuneration. It’s interesting to note that Eaton Vance 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.
A Look at Eaton Vance Corp.’s Growth Numbers
Over the last three years, Eaton Vance Corp. has shrunk its earnings per share by 21% per year. In the last year, its revenue is up 2.8%.
Overall this is not a very positive result for shareholders. And the modest revenue growth over 12 months isn’t much comfort against the reduced EPS. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company’s future earnings..
Has Eaton Vance Corp. Been A Good Investment?
Most shareholders would probably be pleased with Eaton Vance Corp. for providing a total return of 45% over three years. 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.
As we touched on above, Eaton Vance Corp. is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. The company isn’t growing EPS, but shareholder returns have been impressive over the last three years. Considering positive investor returns, it would be bold of us to criticize CEO compensation, but shareholders might want to see healthier EPS growth before a raise is given out.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We’ve identified 4 warning signs for Eaton Vance that investors should be aware of in a dynamic business environment.
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. 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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