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Is The Royal Bank of Scotland Group plc's (LON:RBS) CEO Overpaid Relative To Its Peers?

Simply Wall St

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Ross McEwan became the CEO of The Royal Bank of Scotland Group plc (LON:RBS) in 2013. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.

View our latest analysis for Royal Bank of Scotland Group

How Does Ross McEwan's Compensation Compare With Similar Sized Companies?

Our data indicates that The Royal Bank of Scotland Group plc is worth UK£27b, and total annual CEO compensation is UK£3.6m. (This number is for the twelve months until December 2018). While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at UK£1.0m. We looked at a group of companies with market capitalizations over UK£6.4b and the median CEO total compensation was UK£3.8m. Once you start looking at very large companies, you need to take a broader range, because there simply aren't that many of them.

So Ross McEwan is paid around the average of the companies we looked at. Although this fact alone doesn't tell us a great deal, it becomes more relevant when considered against the business performance.

The graphic below shows how CEO compensation at Royal Bank of Scotland Group has changed from year to year.

LSE:RBS CEO Compensation, July 8th 2019

Is The Royal Bank of Scotland Group plc Growing?

On average over the last three years, The Royal Bank of Scotland Group plc has grown earnings per share (EPS) by 94% each year (using a line of best fit). It saw its revenue drop -2.6% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. While it would be good to see revenue growth, profits matter more in the end. It could be important to check this free visual depiction of what analysts expect for the future.

Has The Royal Bank of Scotland Group plc Been A Good Investment?

Boasting a total shareholder return of 41% over three years, The Royal Bank of Scotland Group plc 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.

In Summary...

Ross McEwan is paid around what is normal the leaders of larger companies.

Few would be critical of the leadership, since returns have been juicy and earnings per share are moving in the right direction. Although the pay is a normal amount, some shareholders probably consider it fair or modest, given the good performance of the stock. So you may want to check if insiders are buying Royal Bank of Scotland Group shares with their own money (free access).

Important note: Royal Bank of Scotland Group may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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. Thank you for reading.