State Street Corporation's (NYSE:STT) CEO Might Not Expect Shareholders To Be So Generous This Year
Key Insights
State Street to hold its Annual General Meeting on 15th of May
CEO Ron O’Hanley's total compensation includes salary of US$1.15m
Total compensation is similar to the industry average
State Street's EPS declined by 2.6% over the past three years while total shareholder loss over the past three years was 2.1%
State Street Corporation (NYSE:STT) has not performed well recently and CEO Ron O’Hanley will probably need to up their game. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 15th of May. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. We present the case why we think CEO compensation is out of sync with company performance.
View our latest analysis for State Street
Comparing State Street Corporation's CEO Compensation With The Industry
At the time of writing, our data shows that State Street Corporation has a market capitalization of US$23b, and reported total annual CEO compensation of US$13m for the year to December 2023. That's a notable decrease of 25% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.1m.
For comparison, other companies in the American Capital Markets industry with market capitalizations above US$8.0b, reported a median total CEO compensation of US$17m. From this we gather that Ron O’Hanley is paid around the median for CEOs in the industry. Furthermore, Ron O’Hanley directly owns US$21m worth of shares in the company, implying that they are deeply invested in the company's success.
Component | 2023 | 2022 | Proportion (2023) |
Salary | US$1.1m | US$1.0m | 9% |
Other | US$12m | US$17m | 91% |
Total Compensation | US$13m | US$18m | 100% |
On an industry level, around 10% of total compensation represents salary and 90% is other remuneration. State Street pays a modest slice of remuneration through salary, as compared 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.
State Street Corporation's Growth
Over the last three years, State Street Corporation has shrunk its earnings per share by 2.6% per year. It saw its revenue drop 1.2% over the last year.
Its a bit disappointing to see that the company has failed to grow its EPS. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 State Street Corporation Been A Good Investment?
Given the total shareholder loss of 2.1% over three years, many shareholders in State Street Corporation are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
To Conclude...
Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 1 warning sign for State Street that investors should be aware of in a dynamic business environment.
Important note: State Street is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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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.
