JB Brown became the CEO of Ally Financial Inc. (NYSE:ALLY) in 2015. First, this article will compare CEO compensation with compensation at other large companies. Then we'll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does JB Brown's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Ally Financial Inc. has a market cap of US$12b, and reported total annual CEO compensation of US$9.6m for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$1.0m. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. We looked at a group of companies with market capitalizations over US$8.0b and the median CEO total compensation was US$11m. 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 JB Brown receives a similar amount to the median CEO pay, amongst the companies we looked at. This doesn't tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context.
The graphic below shows how CEO compensation at Ally Financial has changed from year to year.
Is Ally Financial Inc. Growing?
Ally Financial Inc. has increased its earnings per share (EPS) by an average of 38% a year, over the last three years (using a line of best fit). It achieved revenue growth of 3.7% over the last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. It could be important to check this free visual depiction of what analysts expect for the future.
Has Ally Financial Inc. Been A Good Investment?
Boasting a total shareholder return of 74% over three years, Ally Financial Inc. 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.
JB Brown is paid around what is normal the leaders of larger companies.
Shareholders would surely be happy to see that shareholder returns have been great, and the earnings per share are up. Although the pay is a normal amount, some shareholders probably consider it fair or modest, given the good performance of the stock. Whatever your view on compensation, you might want to check if insiders are buying or selling Ally Financial shares (free trial).
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.
If you spot an error that warrants correction, please contact the editor at email@example.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.
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