Brian Porter became the CEO of The Bank of Nova Scotia (TSE:BNS) in 2013. First, this article will compare CEO compensation with compensation at other large companies. Next, we'll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Brian Porter's Compensation Compare With Similar Sized Companies?
Our data indicates that The Bank of Nova Scotia is worth CA$89b, and total annual CEO compensation is CA$13m. (This number is for the twelve months until October 2018). That's just a smallish increase of 3.2% on last year. We think total compensation is more important but we note that the CEO salary is lower, at CA$1.2m. We took a group of companies with market capitalizations over CA$11b, and calculated the median CEO total compensation to be CA$8.7m. There aren't very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.
As you can see, Brian Porter is paid more than the median CEO pay at large companies, in the same market. However, this does not necessarily mean The Bank of Nova Scotia is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance.
The graphic below shows how CEO compensation at Bank of Nova Scotia has changed from year to year.
Is The Bank of Nova Scotia Growing?
The Bank of Nova Scotia has increased its earnings per share (EPS) by an average of 7.7% a year, over the last three years (using a line of best fit). Its revenue is up 5.6% over last year.
I'm not particularly impressed by the revenue growth, but it is good to see modest EPS growth. It's clear the performance has been quite decent, but it it falls short of outstanding,based on this information. Shareholders might be interested in this free visualization of analyst forecasts.
Has The Bank of Nova Scotia Been A Good Investment?
The Bank of Nova Scotia has generated a total shareholder return of 27% over three years, so most shareholders would be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
We compared total CEO remuneration at The Bank of Nova Scotia with the amount paid at other large companies. As discussed above, we discovered that the company pays more than the median of that group.
Over the last three years returns to investors have been uninspiring, and we would have liked to see stronger business growth. In conclusion we think the company should definitely focus on improving the business before awarding any large pay rises. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Bank of Nova Scotia (free visualization of insider trades).
If you want to buy a stock that is better than Bank of Nova Scotia, this free list of high return, low debt companies is a great place to look.
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