We Think The Compensation For Franklin Resources, Inc.'s (NYSE:BEN) CEO Looks About Right

Franklin Resources, Inc. (NYSE:BEN) has exhibited strong share price growth in the past few years. However, its earnings growth has not kept up, suggesting that there may be something amiss. Some of these issues will occupy shareholders' minds as the AGM rolls around on 07 February 2023. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.

Check out our latest analysis for Franklin Resources

Comparing Franklin Resources, Inc.'s CEO Compensation With The Industry

At the time of writing, our data shows that Franklin Resources, Inc. has a market capitalization of US$16b, and reported total annual CEO compensation of US$16m for the year to September 2022. Notably, that's an increase of 60% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$753k.

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$15m. This suggests that Franklin Resources remunerates its CEO largely in line with the industry average. Moreover, Jenny Johnson also holds US$188m worth of Franklin Resources stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component

2022

2021

Proportion (2022)

Salary

US$753k

US$753k

5%

Other

US$15m

US$9.1m

95%

Total Compensation

US$16m

US$9.9m

100%

On an industry level, around 10% of total compensation represents salary and 90% is other remuneration. Interestingly, the company has chosen to go down an unconventional route in that it pays a smaller salary to Jenny Johnson as compared to non-salary compensation over the one-year period examined. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

ceo-compensation
ceo-compensation

Franklin Resources, Inc.'s Growth

Over the last three years, Franklin Resources, Inc. has shrunk its earnings per share by 8.6% per year. Its revenue is down 7.3% over the previous year.

Few shareholders would be pleased to read that EPS have declined. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Franklin Resources, Inc. Been A Good Investment?

Boasting a total shareholder return of 36% over three years, Franklin Resources, Inc. has done well by shareholders. 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.

To Conclude...

Franklin Resources primarily uses non-salary benefits to reward its CEO. Despite the strong returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about the stock keeping up its current momentum. 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.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 3 warning signs for Franklin Resources that investors should look into moving forward.

Important note: Franklin Resources 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

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