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What Can We Make Of Donegal Group's (NASDAQ:DGIC.B) CEO Compensation?
This article will reflect on the compensation paid to Kevin Burke who has served as CEO of Donegal Group Inc. (NASDAQ:DGIC.B) since 2014. This analysis will also assess whether Donegal Group pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Check out our latest analysis for Donegal Group
Comparing Donegal Group Inc.'s CEO Compensation With the industry
According to our data, Donegal Group Inc. has a market capitalization of US$410m, and paid its CEO total annual compensation worth US$1.0m over the year to December 2019. We note that's an increase of 28% above last year. We note that the salary portion, which stands at US$630.0k constitutes the majority of total compensation received by the CEO.
For comparison, other companies in the same industry with market capitalizations ranging between US$200m and US$800m had a median total CEO compensation of US$2.5m. Accordingly, Donegal Group pays its CEO under the industry median. What's more, Kevin Burke holds US$97k worth of shares in the company in their own name.
| Component | 2019 | 2018 | Proportion (2019) |
| Salary | US$630k | US$630k | 61% |
| Other | US$404k | US$181k | 39% |
| Total Compensation | US$1.0m | US$811k | 100% |
On an industry level, roughly 17% of total compensation represents salary and 83% is other remuneration. Donegal Group is paying a higher share of its remuneration through a salary in comparison to the overall industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
A Look at Donegal Group Inc.'s Growth Numbers
Donegal Group Inc. has seen its earnings per share (EPS) increase by 48% a year over the past three years. It saw its revenue drop 2.2% over the last year.
Shareholders would be glad to know that the company has improved itself over the last few years. It's always a tough situation when revenues are not growing, but ultimately profits are more important. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has Donegal Group Inc. Been A Good Investment?
Given the total shareholder loss of 0.3% over three years, many shareholders in Donegal Group Inc. are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
To Conclude...
As we touched on above, Donegal Group Inc. is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. However, the EPS growth over three years is certainly impressive. Although we would've liked to see positive investor returns, it would be bold of us to criticize CEO compensation when EPS are up. But shareholders will likely want to hold off on any raise for Kevin until investor returns are positive.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 1 warning sign for Donegal Group that investors should think about before committing capital to this stock.
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.
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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.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.
About NasdaqGS:DGIC.B
Donegal Group
An insurance holding company, provides commercial and personal lines of property and casualty coverages.
Excellent balance sheet established dividend payer.
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