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How Does Federated Hermes' (NYSE:FHI) CEO Salary Compare to Peers?

Simply Wall St
·4 mins read

John Donahue has been the CEO of Federated Hermes, Inc. (NYSE:FHI) since 1998, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Federated Hermes.

See our latest analysis for Federated Hermes

How Does Total Compensation For John Donahue Compare With Other Companies In The Industry?

Our data indicates that Federated Hermes, Inc. has a market capitalization of US$2.3b, and total annual CEO compensation was reported as US$5.7m for the year to December 2019. That's a fairly small increase of 5.0% over the previous year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$788k.

For comparison, other companies in the same industry with market capitalizations ranging between US$1.0b and US$3.2b had a median total CEO compensation of US$5.1m. This suggests that Federated Hermes remunerates its CEO largely in line with the industry average. Moreover, John Donahue also holds US$46m worth of Federated Hermes stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component

2019

2018

Proportion (2019)

Salary

US$788k

US$788k

14%

Other

US$4.9m

US$4.7m

86%

Total Compensation

US$5.7m

US$5.4m

100%

On an industry level, roughly 13% of total compensation represents salary and 87% is other remuneration. Although there is a difference in how total compensation is set, Federated Hermes more or less reflects the market in terms of setting the salary. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

ceo-compensation
ceo-compensation

Federated Hermes, Inc.'s Growth

Federated Hermes, Inc. has seen its earnings per share (EPS) increase by 12% a year over the past three years. It achieved revenue growth of 14% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's a real positive to see this sort of revenue growth in a single year. That suggests a healthy and growing business. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Federated Hermes, Inc. Been A Good Investment?

With a three year total loss of 0.2% for the shareholders, Federated Hermes, Inc. would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be lessto generous with CEO compensation.

To Conclude...

As previously discussed, John is compensated close to the median for companies of its size, and which belong to the same industry. At the same time, the company has logged negative shareholder returns over the last three years. However, EPS growth is positive over the same time frame. Overall, we wouldn't say John is paid an unjustified compensation, but shareholders might not favor a raise before shareholder returns show a positive trend.

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've identified 1 warning sign for Federated Hermes that investors should be aware of in a dynamic business environment.

Switching gears from Federated Hermes, 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.

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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