Yahoo Finance Shareholders Will Probably Not Have Any Issues With Prudential Financial, Inc.'s (NYSE:PRU) CEO Compensation
Key Insights
Prudential Financial's Annual General Meeting to take place on 14th of May
Salary of US$1.30m is part of CEO Charlie Lowrey's total remuneration
The total compensation is similar to the average for the industry
Prudential Financial's EPS declined by 4.0% over the past three years while total shareholder return over the past three years was 28%
Despite Prudential Financial, Inc.'s (NYSE:PRU) share price growing positively in the past few years, the per-share earnings growth has not grown to investors' expectations, suggesting that there could be other factors at play driving the share price. Some of these issues will occupy shareholders' minds as the AGM rolls around on 14th of May. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.
Check out our latest analysis for Prudential Financial
Comparing Prudential Financial, Inc.'s CEO Compensation With The Industry
According to our data, Prudential Financial, Inc. has a market capitalization of US$42b, and paid its CEO total annual compensation worth US$19m over the year to December 2023. That's a slight decrease of 4.4% on the prior year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.3m.
For comparison, other companies in the American Insurance industry with market capitalizations above US$8.0b, reported a median total CEO compensation of US$15m. So it looks like Prudential Financial compensates Charlie Lowrey in line with the median for the industry. Moreover, Charlie Lowrey also holds US$21m worth of Prudential Financial stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Component | 2023 | 2022 | Proportion (2023) |
Salary | US$1.3m | US$1.3m | 7% |
Other | US$18m | US$19m | 93% |
Total Compensation | US$19m | US$20m | 100% |
Speaking on an industry level, nearly 14% of total compensation represents salary, while the remainder of 86% is other remuneration. It's interesting to note that Prudential Financial allocates a smaller portion of compensation to salary 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 Prudential Financial, Inc.'s Growth Numbers
Over the last three years, Prudential Financial, Inc. has shrunk its earnings per share by 4.0% per year. In the last year, its revenue is up 1.1%.
Overall this is not a very positive result for shareholders. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Prudential Financial, Inc. Been A Good Investment?
With a total shareholder return of 28% over three years, Prudential Financial, 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...
While it's true that shareholders have owned decent returns, it's hard to overlook the lack of earnings growth and this makes us question whether these returns will continue. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.
CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 1 warning sign for Prudential Financial that you should be aware of before investing.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
