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How Does T. Rowe Price Group's (NASDAQ:TROW) CEO Pay Compare With Company Performance?

Simply Wall St
·4 min read

This article will reflect on the compensation paid to Bill Stromberg who has served as CEO of T. Rowe Price Group, Inc. (NASDAQ:TROW) since 2016. This analysis will also assess whether T. Rowe Price Group pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

View our latest analysis for T. Rowe Price Group

Comparing T. Rowe Price Group, Inc.'s CEO Compensation With the industry

According to our data, T. Rowe Price Group, Inc. has a market capitalization of US$33b, and paid its CEO total annual compensation worth US$15m over the year to December 2019. Notably, that's an increase of 11% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at US$350k.

For comparison, other companies in the industry with market capitalizations above US$8.0b, reported a median total CEO compensation of US$13m. So it looks like T. Rowe Price Group compensates Bill Stromberg in line with the median for the industry. Moreover, Bill Stromberg also holds US$151m worth of T. Rowe Price Group 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$350k

US$350k

2%

Other

US$14m

US$13m

98%

Total Compensation

US$15m

US$13m

100%

Speaking on an industry level, nearly 14% of total compensation represents salary, while the remainder of 86% is other remuneration. A high-salary is usually a no-brainer when it comes to attracting the best executives, but T. Rowe Price Group paid Bill Stromberg a nominal salary to the CEO over the past 12 months, instead focusing on non-salary compensation. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

ceo-compensation
ceo-compensation

A Look at T. Rowe Price Group, Inc.'s Growth Numbers

T. Rowe Price Group, Inc.'s earnings per share (EPS) grew 13% per year over the last three years. In the last year, its revenue is up 6.5%.

Shareholders would be glad to know that the company has improved itself over the last few years. It's also good to see modest revenue growth, suggesting the underlying business is healthy. 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 T. Rowe Price Group, Inc. Been A Good Investment?

Boasting a total shareholder return of 70% over three years, T. Rowe Price Group, Inc. has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

T. Rowe Price Group prefers rewarding its CEO through non-salary benefits. As we touched on above, T. Rowe Price Group, Inc. is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. The company is growing EPS and total shareholder returns have been pleasing. Indeed, many might consider that Bill is compensated rather modestly, given the solid company performance! Stockholders might even be okay with a bump in pay, seeing as how investor returns have been so strong.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 1 warning sign for T. Rowe Price Group that investors should look into moving forward.

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.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.