Bharat Masrani became the CEO of The Toronto-Dominion Bank (TSE:TD) in 2014. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. After that, we will consider the growth in the business. 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 Bharat Masrani's Compensation Compare With Similar Sized Companies?
Our data indicates that The Toronto-Dominion Bank is worth CA$137b, and total annual CEO compensation is CA$15m. (This figure is for the year to October 2018). While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at CA$1.3m. We took a group of companies with market capitalizations over CA$11b, and calculated the median CEO total compensation to be CA$9.0m. 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 Bharat Masrani receives more in total compensation than the median of a group of large companies in the same market as The Toronto-Dominion Bank. However, this doesn't necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.
You can see, below, how CEO compensation at Toronto-Dominion Bank has changed over time.
Is The Toronto-Dominion Bank Growing?
On average over the last three years, The Toronto-Dominion Bank has grown earnings per share (EPS) by 11% each year (using a line of best fit). Its revenue is up 6.6% over 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 The Toronto-Dominion Bank Been A Good Investment?
Most shareholders would probably be pleased with The Toronto-Dominion Bank for providing a total return of 47% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
We compared the total CEO remuneration paid by The Toronto-Dominion Bank, and compared it to remuneration at a group of other large companies. We found that it pays well over the median amount paid in the benchmark group.
However we must not forget that the EPS growth has been very strong over three years. In addition, shareholders have done well over the same time period. So, considering this good performance, the CEO compensation may be quite appropriate. Whatever your view on compensation, you might want to check if insiders are buying or selling Toronto-Dominion Bank 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.
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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. Thank you for reading.