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Share price growth at Provident Financial Services, Inc. (NYSE:PFS) has remained rather flat over the last few years and it may be because earnings has struggled to grow at all. Some of these issues will occupy shareholders' minds as the AGM rolls around on 29 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.
Comparing Provident Financial Services, Inc.'s CEO Compensation With the industry
According to our data, Provident Financial Services, Inc. has a market capitalization of US$1.8b, and paid its CEO total annual compensation worth US$2.9m over the year to December 2020. We note that's an increase of 28% above last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$814k.
On examining similar-sized companies in the industry with market capitalizations between US$1.0b and US$3.2b, we discovered that the median CEO total compensation of that group was US$2.7m. So it looks like Provident Financial Services compensates Chris Martin in line with the median for the industry. Moreover, Chris Martin also holds US$16m worth of Provident Financial Services stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Talking in terms of the industry, salary represented approximately 51% of total compensation out of all the companies we analyzed, while other remuneration made up 49% of the pie. Provident Financial Services sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
Provident Financial Services, Inc.'s Growth
Over the last three years, Provident Financial Services, Inc. has shrunk its earnings per share by 1.5% per year. It achieved revenue growth of 1.9% over the last year.
Its a bit disappointing to see that the company has failed to grow its EPS. The fairly low revenue growth fails to impress given that the EPS is down. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 Provident Financial Services, Inc. Been A Good Investment?
Provident Financial Services, Inc. has generated a total shareholder return of 2.2% over three years, so most shareholders wouldn't be too disappointed. Although, there's always room to improve. In light of that, investors might probably want to see an improvement on their returns before they feel generous about increasing the CEO remuneration.
The lacklustre share price returns along with the lack of earnings growth makes us think that a strong rebound in the share price may be difficult. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 2 warning signs for Provident Financial Services that you should be aware of before investing.
Switching gears from Provident Financial Services, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
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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