Rich Fairbank became the CEO of Capital One Financial Corporation (NYSE:COF) in 1994. This analysis aims first to contrast CEO compensation with other large companies. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Rich Fairbank's Compensation Compare With Similar Sized Companies?
According to our data, Capital One Financial Corporation has a market capitalization of US$48b, and paid its CEO total annual compensation worth US$17m over the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at . 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.
Thus we can conclude that Rich Fairbank receives more in total compensation than the median of a group of large companies in the same market as Capital One Financial Corporation. However, this doesn't necessarily mean the pay is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
You can see a visual representation of the CEO compensation at Capital One Financial, below.
Is Capital One Financial Corporation Growing?
Capital One Financial Corporation has increased its earnings per share (EPS) by an average of 24% a year, over the last three years (using a line of best fit). Revenue was pretty flat on last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. It's also good to see modest revenue growth, suggesting the underlying business is healthy. It could be important to check this free visual depiction of what analysts expect for the future.
Has Capital One Financial Corporation Been A Good Investment?
With a total shareholder return of 22% over three years, Capital One Financial Corporation shareholders would, in general, 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 the total CEO remuneration paid by Capital One Financial Corporation, and compared it to remuneration at a group of other large companies. Our data suggests that it pays above the median CEO pay within that group.
However, the earnings per share growth over three years is certainly impressive. We also think investors are doing ok, over the same time period. While it may be worth researching further, we don't see a problem with the CEO pay, given the good EPS growth. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Capital One Financial (free visualization of insider trades).
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 firstname.lastname@example.org. 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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