Why We Think Prosperity Bancshares, Inc.'s (NYSE:PB) CEO Compensation Is Not Excessive At All
CEO David Zalman has done a decent job of delivering relatively good performance at Prosperity Bancshares, Inc. (NYSE:PB) recently. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 20 April 2021. We present our case of why we think CEO compensation looks fair.
View our latest analysis for Prosperity Bancshares
Comparing Prosperity Bancshares, Inc.'s CEO Compensation With the industry
At the time of writing, our data shows that Prosperity Bancshares, Inc. has a market capitalization of US$7.0b, and reported total annual CEO compensation of US$3.5m for the year to December 2020. That's a slight decrease of 6.4% on the prior year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$990k.
In comparison with other companies in the industry with market capitalizations ranging from US$4.0b to US$12b, the reported median CEO total compensation was US$4.9m. This suggests that Prosperity Bancshares remunerates its CEO largely in line with the industry average. Furthermore, David Zalman directly owns US$64m worth of shares in the company, implying that they are deeply invested in the company's success.
Component | 2020 | 2019 | Proportion (2020) |
Salary | US$990k | US$964k | 28% |
Other | US$2.5m | US$2.8m | 72% |
Total Compensation | US$3.5m | US$3.7m | 100% |
Speaking on an industry level, nearly 42% of total compensation represents salary, while the remainder of 58% is other remuneration. It's interesting to note that Prosperity Bancshares allocates a smaller portion of compensation to salary in comparison to the broader industry. 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 Prosperity Bancshares, Inc.'s Growth Numbers
Prosperity Bancshares, Inc.'s earnings per share (EPS) grew 13% per year over the last three years. It achieved revenue growth of 40% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Prosperity Bancshares, Inc. Been A Good Investment?
With a total shareholder return of 12% over three years, Prosperity Bancshares, Inc. shareholders would, in general, be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.
In Summary...
The company's decent performance might have made most shareholders happy, possibly making CEO remuneration the least of the concerns to be discussed in the upcoming AGM. In saying that, any proposed increase to CEO compensation will still be assessed on how reasonable it is based on performance and industry benchmarks.
CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. In our study, we found 2 warning signs for Prosperity Bancshares you should be aware of, and 1 of them is a bit unpleasant.
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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