In 2016, Dino Robusto was appointed CEO of CNA Financial Corporation (NYSE:CNA). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Dino Robusto’s Compensation Compare With Similar Sized Companies?
Our data indicates that CNA Financial Corporation is worth US$8.5b, and total annual CEO compensation was reported as US$13m for the year to December 2019. That’s a notable increase of 29% on last year. While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$1.0m. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$4.0b to US$12b. The median total CEO compensation was US$7.3m.
Pay mix tells us a lot about how a company functions versus the wider industry, and it’s no different in the case of CNA Financial. Talking in terms of the sector, salary represented approximately 19% of total compensation out of all the companies we analysed, while other remuneration made up 81% of the pie. CNA Financial sets aside a smaller share of compensation for salary, in comparison to the overall industry.
It would therefore appear that CNA Financial Corporation pays Dino Robusto 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. You can see a visual representation of the CEO compensation at CNA Financial, below.
Is CNA Financial Corporation Growing?
CNA Financial Corporation has reduced its earnings per share by an average of 12% a year, over the last three years (measured with a line of best fit). Revenue was pretty flat on last year.
Unfortunately, earnings per share have trended lower over the last three years. And the flat revenue is seriously uninspiring. These factors suggest that the business performance wouldn’t really justify a high pay packet for the CEO. It could be important to check this free visual depiction of what analysts expect for the future.
Has CNA Financial Corporation Been A Good Investment?
Given the total loss of 17% over three years, many shareholders in CNA Financial Corporation are probably rather dissatisfied, to say the least. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.
We compared the total CEO remuneration paid by CNA Financial Corporation, and compared it to remuneration at a group of 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. Arguably worse, investors are without a positive return for the last three years. Notably, the CEO remuneration is actually up on last year. Some might well form the view that the CEO is paid too generously! Looking into other areas, we’ve picked out 3 warning signs for CNA Financial that investors should think about before committing capital to this stock.
If you want to buy a stock that is better than CNA Financial, this free list of high return, low debt companies is a great place to look.
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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.