This article will reflect on the compensation paid to Randy Ramlo who has served as CEO of United Fire Group, Inc. (NASDAQ:UFCS) since 2007. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for United Fire Group.
Comparing United Fire Group, Inc.’s CEO Compensation With the industry
According to our data, United Fire Group, Inc. has a market capitalization of US$487m, and paid its CEO total annual compensation worth US$2.3m over the year to December 2019. Notably, that’s a decrease of 28% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$800k.
On examining similar-sized companies in the industry with market capitalizations between US$200m and US$800m, we discovered that the median CEO total compensation of that group was US$2.5m. From this we gather that Randy Ramlo is paid around the median for CEOs in the industry. Furthermore, Randy Ramlo directly owns US$777k worth of shares in the company.
Talking in terms of the industry, salary represented approximately 17% of total compensation out of all the companies we analyzed, while other remuneration made up 83% of the pie. United Fire Group pays out 35% of remuneration in the form of a salary, significantly higher than the industry average. It’s important to note that a slant towards non-salary compensation suggests that total pay is tied to the company’s performance.
United Fire Group, Inc.’s Growth
United Fire Group, Inc. has reduced its earnings per share by 91% a year over the last three years. In the last year, its revenue is down 7.5%.
Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. It’s hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has United Fire Group, Inc. Been A Good Investment?
Given the total shareholder loss of 52% over three years, many shareholders in United Fire Group, Inc. are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be lessto generous with CEO compensation.
As we touched on above, United Fire Group, Inc. is currently paying a compensation that’s close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Meanwhile, EPS growth and shareholder returns have been in the red for the last three years. We’d stop short of saying compensation is inappropriate, but we would understand if shareholders had questions regarding a future raise.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That’s why we did some digging and identified 2 warning signs for United Fire Group that investors should think about before committing capital to this stock.
Important note: United Fire Group 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.
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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.
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