U.S. markets open in 5 hours 6 minutes
  • S&P Futures

    4,125.75
    +18.75 (+0.46%)
     
  • Dow Futures

    34,050.00
    +112.00 (+0.33%)
     
  • Nasdaq Futures

    13,189.25
    +89.00 (+0.68%)
     
  • Russell 2000 Futures

    2,178.10
    +9.50 (+0.44%)
     
  • Crude Oil

    63.57
    -0.25 (-0.39%)
     
  • Gold

    1,833.00
    +9.00 (+0.49%)
     
  • Silver

    27.27
    +0.21 (+0.78%)
     
  • EUR/USD

    1.2126
    +0.0041 (+0.34%)
     
  • 10-Yr Bond

    1.6680
    0.0000 (0.00%)
     
  • Vix

    22.03
    -5.56 (-20.15%)
     
  • GBP/USD

    1.4070
    +0.0018 (+0.13%)
     
  • USD/JPY

    109.2950
    -0.1390 (-0.13%)
     
  • BTC-USD

    50,093.17
    -335.82 (-0.67%)
     
  • CMC Crypto 200

    1,383.56
    -4.35 (-0.31%)
     
  • FTSE 100

    7,004.72
    +41.39 (+0.59%)
     
  • Nikkei 225

    28,084.47
    +636.46 (+2.32%)
     

Most Shareholders Will Probably Agree With Webster Financial Corporation's (NYSE:WBS) CEO Compensation

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
Simply Wall St
·4 min read
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

Despite Webster Financial Corporation's (NYSE:WBS) share price growing positively in the past few years, the per-share earnings growth has not grown to investors' expectations, suggesting that there could be other factors at play driving the share price. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 22 April 2021. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.

See our latest analysis for Webster Financial

Comparing Webster Financial Corporation's CEO Compensation With the industry

At the time of writing, our data shows that Webster Financial Corporation has a market capitalization of US$5.3b, and reported total annual CEO compensation of US$3.5m for the year to December 2020. That's mostly flat as compared to the prior year's compensation. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$995k.

On examining similar-sized companies in the industry with market capitalizations between US$4.0b and US$12b, we discovered that the median CEO total compensation of that group was US$4.8m. This suggests that Webster Financial remunerates its CEO largely in line with the industry average. Moreover, John Ciulla also holds US$6.8m worth of Webster Financial stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component

2020

2019

Proportion (2020)

Salary

US$995k

US$961k

29%

Other

US$2.5m

US$2.6m

71%

Total Compensation

US$3.5m

US$3.6m

100%

On an industry level, around 42% of total compensation represents salary and 58% is other remuneration. Webster Financial pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

ceo-compensation
ceo-compensation

Webster Financial Corporation's Growth

Over the last three years, Webster Financial Corporation has shrunk its earnings per share by 4.3% per year. It saw its revenue drop 14% over the last year.

The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Webster Financial Corporation Been A Good Investment?

With a total shareholder return of 7.0% over three years, Webster Financial Corporation has done okay by shareholders, but there's always room for improvement. As a result, investors in the company might be reluctant about agreeing to increase CEO pay in the future, before seeing an improvement on their returns.

In Summary...

Despite the positive returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about whether these returns will continue. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 2 warning signs for Webster Financial that you should be aware of before investing.

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 (at) simplywallst.com.