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In 2015 François Desjardins was appointed CEO of Laurentian Bank of Canada (TSE:LB). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does François Desjardins’s Compensation Compare With Similar Sized Companies?
Our data indicates that Laurentian Bank of Canada is worth CA$1.8b, and total annual CEO compensation is CA$556k. (This is based on the year to 2017). Notably, the salary of CA$556k is the vast majority of the CEO compensation. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of CA$1.0b to CA$3.2b. The median total CEO compensation was CA$2.1m.
Most shareholders would consider it a positive that François Desjardins takes less compensation than the CEOs of most similar size companies, leaving more for shareholders. While this is a good thing, you’ll need to understand the business better before you can form an opinion.
The graphic below shows how CEO compensation at Laurentian Bank of Canada has changed from year to year.
Is Laurentian Bank of Canada Growing?
Laurentian Bank of Canada has increased its earnings per share (EPS) by an average of 18% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 4.2%.
This shows that the company has improved itself over the last few years. Good news for shareholders. It’s also good to see modest revenue growth, suggesting the underlying business is healthy. It could be important to check this free visual depiction of what analysts expect for the future.
Has Laurentian Bank of Canada Been A Good Investment?
Laurentian Bank of Canada has generated a total shareholder return of 11% over three years, so most shareholders would be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.
It appears that Laurentian Bank of Canada remunerates its CEO below most similar sized companies. Many would consider this to indicate that the pay is modest since the business is growing. The total shareholder return might not be amazing, but that doesn’t mean that François Desjardins is paid too much.
It’s good to see reasonable payment of the CEO, even while the business improves. It would be an additional positive if insiders are buying shares. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Laurentian Bank of Canada.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.