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Karl Roessner has been the CEO of E*TRADE Financial Corporation (NASDAQ:ETFC) since 2016. First, this article will compare CEO compensation with compensation at other large companies. After that, we will consider the growth in the business. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.
How Does Karl Roessner's Compensation Compare With Similar Sized Companies?
At the time of writing our data says that E*TRADE Financial Corporation has a market cap of US$11b, and is paying total annual CEO compensation of US$6.3m. (This is based on the year to December 2018). That's a notable increase of 8.5% on last year. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$977k. We took a group of companies with market capitalizations over US$8.0b, and calculated the median CEO total compensation to be US$12m. There aren't very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.
Most shareholders would consider it a positive that Karl Roessner takes less in total compensation than the CEOs of most other large companies, leaving more for shareholders. However, before we heap on the praise, we should delve deeper to understand business performance.
You can see, below, how CEO compensation at E*TRADE Financial has changed over time.
Is E*TRADE Financial Corporation Growing?
On average over the last three years, E*TRADE Financial Corporation has grown earnings per share (EPS) by 39% each year (using a line of best fit). Its revenue is up 11% over last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. You might want to check this free visual report on analyst forecasts for future earnings.
Has E*TRADE Financial Corporation Been A Good Investment?
Most shareholders would probably be pleased with E*TRADE Financial Corporation for providing a total return of 65% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
E*TRADE Financial Corporation is currently paying its CEO below what is normal for large companies. Many would consider this to indicate that the pay is modest since the business is growing. And given most shareholders are probably very happy with recent returns, you might even think that Karl Roessner deserves a raise!
It is relatively rare to see a modestly paid CEO when performance is so impressive. It would be even more positive if company insiders are buying shares. So you may want to check if insiders are buying E*TRADE Financial shares with their own money (free access).
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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. Thank you for reading.