Dan Glaser has been the CEO of Marsh & McLennan Companies, Inc. (NYSE:MMC) since 2013, and this article will examine the executive’s compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Comparing Marsh & McLennan Companies, Inc.’s CEO Compensation With the industry
Our data indicates that Marsh & McLennan Companies, Inc. has a market capitalization of US$55b, and total annual CEO compensation was reported as US$20m for the year to December 2019. We note that’s an increase of 18% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.5m.
For comparison, other companies in the industry with market capitalizations above US$8.0b, reported a median total CEO compensation of US$14m. This suggests that Dan Glaser is paid more than the median for the industry. What’s more, Dan Glaser holds US$18m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
On a industry level, around 17% of total compensation represents salary and 83% is other remuneration. Marsh & McLennan Companies pays a modest slice of remuneration through salary, as compared to the broader industry. If non-salary compensation dominates total pay, it’s an indicator that the executive’s salary is tied to company performance.
Marsh & McLennan Companies, Inc.’s Growth
Marsh & McLennan Companies, Inc. saw earnings per share stay pretty flat over the last three years. It achieved revenue growth of 15% over the last year.
A lack of earnings per share improvement is not good to see. There’s no doubt that the silver lining is that revenue is up. But it isn’t sufficiently fast growth to overlook the fact that earnings per share has gone backwards over three years. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company’s future earnings..
Has Marsh & McLennan Companies, Inc. Been A Good Investment?
We think that the total shareholder return of 45%, over three years, would leave most Marsh & McLennan Companies, Inc. shareholders smiling. This strong performance might mean some shareholders don’t mind if the CEO were to be paid more than is normal for a company of its size.
As we noted earlier, Marsh & McLennan Companies pays its CEO higher than the norm for similar-sized companies belonging to the same industry. We feel that earnings per share have been a bit disappointing, but it’s nice to see positive shareholder returns over the last three years. So while we don’t think, Dan is paid too much, shareholders may want to see some positive earnings growth before pay rises are given out.
We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That’s why we did our research, and identified 2 warning signs for Marsh & McLennan Companies (of which 1 makes us a bit uncomfortable!) that you should know about in order to have a holistic understanding of the 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.
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