Alan Colberg became the CEO of Assurant, Inc. (NYSE:AIZ) in 2015. First, this article will compare CEO compensation with compensation at similar sized companies. Next, we’ll consider growth that the business demonstrates. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.
How Does Alan Colberg’s Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Assurant, Inc. has a market cap of US$6.0b, and reported total annual CEO compensation of US$10m for the year to December 2019. That’s less than last year. While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$1.0m. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. When we examined a selection of companies with market caps ranging from US$4.0b to US$12b, we found the median CEO total compensation was US$7.6m.
Now let’s take a look at the pay mix on an industry and company level to gain a better understanding of where Assurant stands. On a sector level, around 22% of total compensation represents salary and 78% is other remuneration. Assurant sets aside a smaller share of compensation for salary, in comparison to the overall industry.
As you can see, Alan Colberg is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Assurant, Inc. is paying too much. 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 Assurant has changed over time.
Is Assurant, Inc. Growing?
Assurant, Inc. has reduced its earnings per share by an average of 18% a year, over the last three years (measured with a line of best fit). Its revenue is up 23% over last year.
Unfortunately, earnings per share have trended lower over the last three years. There’s no doubt that the silver lining is that revenue is up. But it isn’t sufficiently fast growth to overlook the fact that earnings per share has gone backwards over three years. These factors suggest that the business performance wouldn’t really justify a high pay packet for the CEO. Shareholders might be interested in this free visualization of analyst forecasts.
Has Assurant, Inc. Been A Good Investment?
With a total shareholder return of 13% over three years, Assurant, Inc. shareholders would, in general, be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.
We compared total CEO remuneration at Assurant, Inc. with the amount paid at companies with a similar market capitalization. Our data suggests that it pays above the median CEO pay within that group.
Earnings per share have not grown in three years, and the revenue growth fails to impress us. While shareholder returns are acceptable, they don’t delight. So you may want to delve deeper, because we don’t think the CEO pay is too low. Looking into other areas, we’ve picked out 2 warning signs for Assurant that investors should think about before committing capital to this stock.
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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