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CEO John Donahue has done a decent job of delivering relatively good performance at Federated Hermes, Inc. (NYSE:FHI) recently. This is something shareholders will keep in mind as they cast their votes on company resolutions such as executive remuneration in the upcoming AGM on 29 April 2021. We present our case of why we think CEO compensation looks fair.
How Does Total Compensation For John Donahue Compare With Other Companies In The Industry?
Our data indicates that Federated Hermes, Inc. has a market capitalization of US$2.9b, and total annual CEO compensation was reported as US$6.1m for the year to December 2020. That's just a smallish increase of 7.2% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$788k.
For comparison, other companies in the same industry with market capitalizations ranging between US$2.0b and US$6.4b had a median total CEO compensation of US$5.6m. From this we gather that John Donahue is paid around the median for CEOs in the industry. Moreover, John Donahue also holds US$51m worth of Federated Hermes stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
On an industry level, around 12% of total compensation represents salary and 88% is other remuneration. There isn't a significant difference between Federated Hermes and the broader market, in terms of salary allocation in the overall compensation package. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
A Look at Federated Hermes, Inc.'s Growth Numbers
Over the past three years, Federated Hermes, Inc. has seen its earnings per share (EPS) grow by 4.2% per year. It achieved revenue growth of 9.1% over the last year.
We would argue that the improvement in revenue is good, but isn't particularly impressive, 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. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Federated Hermes, Inc. Been A Good Investment?
Federated Hermes, Inc. has served shareholders reasonably well, with a total return of 31% over three years. But they would probably prefer not to see CEO compensation far in excess of the median.
Seeing that the company has put up a decent performance, only a few shareholders, if any at all, might have questions about the CEO pay in the upcoming AGM. However, we still think that any proposed increase in CEO compensation will be examined closely to make sure the compensation is appropriate and linked to performance.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 1 warning sign for Federated Hermes that investors should think about before committing capital to this stock.
Switching gears from Federated Hermes, 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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