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It would be hard to discount the role that CEO Roger Hochschild has played in delivering the impressive results at Discover Financial Services (NYSE:DFS) recently. Shareholders will have this at the front of their minds in the upcoming AGM on 05 May 2021. This would also be a chance for them to hear the board review the financial results, discuss future company strategy and vote on any resolutions such as executive remuneration. We think the CEO has done a pretty decent job and we discuss why the CEO compensation is appropriate.
How Does Total Compensation For Roger Hochschild Compare With Other Companies In The Industry?
Our data indicates that Discover Financial Services has a market capitalization of US$34b, and total annual CEO compensation was reported as US$10m for the year to December 2020. We note that's an increase of 12% above last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.1m.
On comparing similar companies in the industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$10m. So it looks like Discover Financial Services compensates Roger Hochschild in line with the median for the industry. Furthermore, Roger Hochschild directly owns US$43m worth of shares in the company, implying that they are deeply invested in the company's success.
Talking in terms of the industry, salary represented approximately 18% of total compensation out of all the companies we analyzed, while other remuneration made up 82% of the pie. Discover Financial Services pays a modest slice of remuneration through salary, as compared to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
Discover Financial Services' Growth
Discover Financial Services's earnings per share (EPS) grew 15% per year over the last three years. It achieved revenue growth of 9.9% over the last year.
Shareholders would be glad to know that the company has improved itself over the last few years. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Discover Financial Services Been A Good Investment?
We think that the total shareholder return of 70%, over three years, would leave most Discover Financial Services shareholders smiling. 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.
The company's solid performance might have made most shareholders happy, possibly making CEO remuneration the least of the matters to be discussed in the AGM. However, investors will get the chance to engage on key strategic initiatives and future growth opportunities for the company and set their longer-term expectations.
We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 4 warning signs for Discover Financial Services you should be aware of, and 1 of them is a bit concerning.
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.
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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