In 2014 Bruce Lucas was appointed CEO of Heritage Insurance Holdings, Inc. (NYSE:HRTG). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Bruce Lucas’s Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Heritage Insurance Holdings, Inc. has a market cap of US$359m, and reported total annual CEO compensation of US$8.7m for the year to December 2018. While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$2.2m. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We looked at a group of companies with market capitalizations from US$200m to US$800m, and the median CEO total compensation was US$1.7m.
It would therefore appear that Heritage Insurance Holdings, Inc. pays Bruce Lucas more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn’t mean the remuneration is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.
The graphic below shows how CEO compensation at Heritage Insurance Holdings has changed from year to year.
Is Heritage Insurance Holdings, Inc. Growing?
Heritage Insurance Holdings, Inc. has reduced its earnings per share by an average of 28% a year, over the last three years (measured with a line of best fit). It achieved revenue growth of 7.3% over the last year.
Unfortunately, earnings per share have trended lower over the last three years. And the modest revenue growth over 12 months isn’t much comfort against the reduced earnings per share. It’s hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. You might want to check this free visual report on analyst forecasts for future earnings.
Has Heritage Insurance Holdings, Inc. Been A Good Investment?
With a three year total loss of 9.1%, Heritage Insurance Holdings, Inc. would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
We examined the amount Heritage Insurance Holdings, Inc. pays its CEO, and compared it to the amount paid by similar sized companies. 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. Over the same period, investors would have come away with nothing in the way of share price gains. In our opinion the CEO might be paid too generously! Whatever your view on compensation, you might want to check if insiders are buying or selling Heritage Insurance Holdings shares (free trial).
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.
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.
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