Is Zurich Insurance Group AG’s (VTX:ZURN) CEO Overpaid Relative To Its Peers?

In 2016, Mario Greco was appointed CEO of Zurich Insurance Group AG (VTX:ZURN). This analysis aims first to contrast CEO compensation with other large 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.

Check out our latest analysis for Zurich Insurance Group

How Does Mario Greco’s Compensation Compare With Similar Sized Companies?

Our data indicates that Zurich Insurance Group AG is worth CHF46b, and total annual CEO compensation was reported as CHF9.3m for the year to December 2019. That’s a fairly small increase of 5.7% on year before. While we always look at total compensation first, we note that the salary component is less, at CHF1.7m. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. When we examined a group of companies with market caps over CHF7.7b, we found that their median CEO total compensation was CHF6.4m. There aren’t very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.

Now let’s take a look at the pay mix on an industry and company level to gain a better understanding of where Zurich Insurance Group stands. On an industry level, roughly 35% of total compensation represents salary and 65% is other remuneration. Zurich Insurance Group sets aside a smaller share of compensation for salary, in comparison to the overall industry.

Thus we can conclude that Mario Greco receives more in total compensation than the median of a group of large companies in the same market as Zurich Insurance Group AG. However, this doesn’t necessarily mean the pay is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business. You can see a visual representation of the CEO compensation at Zurich Insurance Group, below.

SWX:ZURN CEO Compensation May 28th 2020
SWX:ZURN CEO Compensation May 28th 2020

Is Zurich Insurance Group AG Growing?

On average over the last three years, Zurich Insurance Group AG has seen earnings per share (EPS) move in a favourable direction by 12% each year (using a line of best fit). In the last year, its revenue is up 53%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. It could be important to check this free visual depiction of what analysts expect for the future.

Has Zurich Insurance Group AG Been A Good Investment?

Zurich Insurance Group AG has served shareholders reasonably well, with a total return of 29% over three years. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary…

We compared total CEO remuneration at Zurich Insurance Group AG with the amount paid at other large companies. We found that it pays well over the median amount paid in the benchmark group.

However we must not forget that the EPS growth has been very strong over three years. We also note that, over the same time frame, shareholder returns haven’t been bad. While it may be worth researching further, we don’t see a problem with the CEO pay, given the good EPS growth. Looking into other areas, we’ve picked out 1 warning sign for Zurich Insurance Group that investors should think about before committing capital to this stock.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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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. 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. Thank you for reading.