Is Flagstar Bancorp, Inc.'s (NYSE:FBC) CEO Paid Enough Relative To Peers?
In 2013, Sandro DiNello was appointed CEO of Flagstar Bancorp, Inc. (NYSE:FBC). 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. This process should give us an idea about how appropriately the CEO is paid.
See our latest analysis for Flagstar Bancorp
How Does Sandro DiNello's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Flagstar Bancorp, Inc. has a market cap of US$1.2b, and reported total annual CEO compensation of US$3.5m for the year to December 2019. That's less than last year. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$1.0m. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$1.0b to US$3.2b. The median total CEO compensation was US$4.8m.
Now let's take a look at the pay mix on an industry and company level to gain a better understanding of where Flagstar Bancorp stands. Speaking on an industry level, we can see that nearly 59% of total compensation represents salary, while the remainder of 41% is other remuneration. Readers will want to know that Flagstar Bancorp pays a modest slice of remuneration through salary, as compared to the wider sector.
So Sandro DiNello receives a similar amount to the median CEO pay, amongst the companies we looked at. While this data point isn't particularly informative alone, it gains more meaning when considered with business performance. You can see a visual representation of the CEO compensation at Flagstar Bancorp, below.
Is Flagstar Bancorp, Inc. Growing?
Over the last three years Flagstar Bancorp, Inc. has seen earnings per share (EPS) move in a positive direction by an average of 20% per year (using a line of best fit). It achieved revenue growth of 20% over the last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. You might want to check this free visual report on analyst forecasts for future earnings.
Has Flagstar Bancorp, Inc. Been A Good Investment?
Given the total loss of 26% over three years, many shareholders in Flagstar Bancorp, Inc. are probably rather dissatisfied, to say the least. So shareholders would probably think the company shouldn't be too generous with CEO compensation.
In Summary...
Remuneration for Sandro DiNello is close enough to the median pay for a CEO of a similar sized company .
We'd say the company can boast of its EPS growth, but we find the returns over the last three years to be lacking. Considering the improvement in earnings per share, one could argue that the CEO pay is appropriate, albeit not too low. CEO compensation is an important area to keep your eyes on, but we've also identified 3 warning signs for Flagstar Bancorp (2 are potentially serious!) that you should be aware of before investing here.
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.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.
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