Why OneSavings Bank's (LON:OSB) CEO Pay Matters
Andy Golding became the CEO of OneSavings Bank Plc (LON:OSB) in 2012, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for OneSavings Bank.
See our latest analysis for OneSavings Bank
How Does Total Compensation For Andy Golding Compare With Other Companies In The Industry?
Our data indicates that OneSavings Bank Plc has a market capitalization of UK£1.1b, and total annual CEO compensation was reported as UK£1.6m for the year to December 2019. That is, the compensation was roughly the same as last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at UK£516k.
In comparison with other companies in the industry with market capitalizations ranging from UK£766m to UK£2.5b, the reported median CEO total compensation was UK£2.6m. This suggests that Andy Golding is paid below the industry median. Furthermore, Andy Golding directly owns UK£2.1m worth of shares in the company, implying that they are deeply invested in the company's success.
Component | 2019 | 2018 | Proportion (2019) |
Salary | UK£516k | UK£501k | 32% |
Other | UK£1.1m | UK£1.1m | 68% |
Total Compensation | UK£1.6m | UK£1.6m | 100% |
On an industry level, roughly 49% of total compensation represents salary and 51% is other remuneration. In OneSavings Bank's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
A Look at OneSavings Bank Plc's Growth Numbers
Over the past three years, OneSavings Bank Plc has seen its earnings per share (EPS) grow by 2.1% per year. In the last year, its revenue is up 20%.
We would argue that the modest growth in revenue is a notable positive. And the improvement in earnings per share is modest but respectable. So while performance isn't amazing, we think it really does seem quite respectable. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has OneSavings Bank Plc Been A Good Investment?
Given the total shareholder loss of 32% over three years, many shareholders in OneSavings Bank Plc are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be lessto generous with CEO compensation.
To Conclude...
As we touched on above, OneSavings Bank Plc is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. But then, EPS growth is lacking and so are the returns to shareholders. So while we would not say that Andy is generously paid, it would be good to see an improvement in business performance before there is talk about a raise.
CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 3 warning signs for OneSavings Bank you should be aware of, and 2 of them don't sit too well with us.
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.
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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