In 2004 Weston Hicks was appointed CEO of Alleghany Corporation (NYSE:Y). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. 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 Weston Hicks’s Compensation Compare With Similar Sized Companies?
According to our data, Alleghany Corporation has a market capitalization of US$11b, and paid its CEO total annual compensation worth US$8.1m over the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$1.0m. 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 US$8.0b, we found that their 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.
That means Weston Hicks receives fairly typical remuneration for the CEO of a large company. This doesn’t tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context.
The graphic below shows how CEO compensation at Alleghany has changed from year to year.
Is Alleghany Corporation Growing?
Over the last three years Alleghany Corporation has grown its earnings per share (EPS) by an average of 14% per year (using a line of best fit). It achieved revenue growth of 31% over the last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. Shareholders might be interested in this free visualization of analyst forecasts.
Has Alleghany Corporation Been A Good Investment?
Alleghany Corporation has served shareholders reasonably well, with a total return of 17% over three years. But they would probably prefer not to see CEO compensation far in excess of the median.
Weston Hicks is paid around the same as most CEOs of large companies.
The company is growing EPS but shareholder returns have been sound but not amazing. So considering these factors, we think the CEO pay is probably quite reasonable. Shareholders may want to check for free if Alleghany insiders are buying or selling shares.
If you want to buy a stock that is better than Alleghany, this free list of high return, low debt companies is a great place to look.
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