Is AGNC Investment Corp.’s (NASDAQ:AGNC) CEO Pay Justified?

In 2016 Gary Kain was appointed CEO of AGNC Investment Corp. (NASDAQ:AGNC). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big 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 method should give us information to assess how appropriately the company pays the CEO.

View our latest analysis for AGNC Investment

How Does Gary Kain’s Compensation Compare With Similar Sized Companies?

Our data indicates that AGNC Investment Corp. is worth US$10b, and total annual CEO compensation was reported as US$15m for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$1.8m. 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 over US$8.0b and the median CEO total compensation was US$11m. Once you start looking at very large companies, you need to take a broader range, because there simply aren’t that many of them.

As you can see, Gary Kain is paid more than the median CEO pay at large companies, in the same market. However, this does not necessarily mean AGNC Investment Corp. is paying too much. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.

You can see a visual representation of the CEO compensation at AGNC Investment, below.

NasdaqGS:AGNC CEO Compensation, January 31st 2020
NasdaqGS:AGNC CEO Compensation, January 31st 2020

Is AGNC Investment Corp. Growing?

Over the last three years AGNC Investment Corp. has shrunk its earnings per share by an average of 70% per year (measured with a line of best fit). Its revenue is up 237% over last year.

Investors should note that, over three years, earnings per share are down. But on the other hand, revenue growth is strong, suggesting a brighter future. It’s hard to reach a conclusion about business performance right now. This may be one to watch. It could be important to check this free visual depiction of what analysts expect for the future.

Has AGNC Investment Corp. Been A Good Investment?

I think that the total shareholder return of 37%, over three years, would leave most AGNC Investment Corp. shareholders smiling. This strong performance might mean some shareholders don’t mind if the CEO were to be paid more than is normal for a company of its size.

In Summary…

We compared total CEO remuneration at AGNC Investment Corp. with the amount paid at other large companies. As discussed above, we discovered that the company pays more than the median of that group.

One might like to have seen stronger growth, but shareholder returns have been pleasing, over the last three years. As a result of the juicy return to investors, the CEO remuneration may well be quite reasonable. So you may want to check if insiders are buying AGNC Investment shares with their own money (free access).

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 editorial-team@simplywallst.com. 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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