Is Genworth Mortgage Insurance Australia Limited’s (ASX:GMA) CEO Being Overpaid?

Georgette Nicholas has been the CEO of Genworth Mortgage Insurance Australia Limited (ASX:GMA) since 2016. First, this article will compare CEO compensation with compensation at similar sized 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.

Check out our latest analysis for Genworth Mortgage Insurance Australia

How Does Georgette Nicholas’s Compensation Compare With Similar Sized Companies?

According to our data, Genworth Mortgage Insurance Australia Limited has a market capitalization of AU$1.1b, and pays its CEO total annual compensation worth AU$2.0m. (This number is for the twelve months until December 2018). That’s actually a decrease on the year before. We think total compensation is more important but we note that the CEO salary is lower, at AU$858k. We looked at a group of companies with market capitalizations from AU$564m to AU$2.3b, and the median CEO compensation was AU$1.5m.

As you can see, Georgette Nicholas is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Genworth Mortgage Insurance Australia Limited is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance.

You can see, below, how CEO compensation at Genworth Mortgage Insurance Australia has changed over time.

ASX:GMA CEO Compensation, March 4th 2019
ASX:GMA CEO Compensation, March 4th 2019

Is Genworth Mortgage Insurance Australia Limited Growing?

Over the last three years Genworth Mortgage Insurance Australia Limited has shrunk its earnings per share by an average of 29% per year (measured with a line of best fit). Its revenue is down -24% over last year.

Unfortunately, earnings per share have trended lower over the last three years. This is compounded by the fact revenue is actually down on last year. 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 Genworth Mortgage Insurance Australia Limited Been A Good Investment?

Most shareholders would probably be pleased with Genworth Mortgage Insurance Australia Limited for providing a total return of 50% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary…

We compared the total CEO remuneration paid by Genworth Mortgage Insurance Australia Limited, 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.

But clearly there are some positives, because investors have done well over the same time frame. Given this situation we doubt shareholders are particularly concerned about the CEO compensation. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Genworth Mortgage Insurance Australia.

Important note: Genworth Mortgage Insurance Australia may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.