We Think Shareholders May Consider Being More Generous With Insurance Australia Group Limited's (ASX:IAG) CEO Compensation Package

Key Insights

• Insurance Australia Group will host its Annual General Meeting on 10th of October
• CEO Nick Hawkins' total compensation includes salary of AU$1.77m
• Total compensation is 49% below industry average
• Over the past three years, Insurance Australia Group's EPS grew by 22% and over the past three years, the total shareholder return was 31%

The decent performance at Insurance Australia Group Limited (ASX:IAG) recently will please most shareholders as they go into the AGM coming up on 10th of October. The focus will probably be on the future strategic initiatives that the board and management will put in place to improve the business rather than executive remuneration when they cast their votes on company resolutions. We have prepared some analysis below and we show why we think CEO compensation looks decent with even the possibility for a raise.

View our latest analysis for Insurance Australia Group

How Does Total Compensation For Nick Hawkins Compare With Other Companies In The Industry?

At the time of writing, our data shows that Insurance Australia Group Limited has a market capitalization of AU$14b, and reported total annual CEO compensation of AU$2.9m for the year to June 2023. That's mostly flat as compared to the prior year's compensation. In particular, the salary of AU$1.77m, makes up a huge portion of the total compensation being paid to the CEO.

On examining similar-sized companies in the Australian Insurance industry with market capitalizations between AU$6.3b and AU$19b, we discovered that the median CEO total compensation of that group was AU$5.7m. Accordingly, Insurance Australia Group pays its CEO under the industry median. Furthermore, Nick Hawkins directly owns AU$2.8m worth of shares in the company.

Component	2023	2022	Proportion (2023)
Salary	AU$1.8m	AU$1.7m	60%
Other	AU$1.2m	AU$1.2m	40%
Total Compensation	AU$2.9m	AU$2.9m	100%

On an industry level, around 52% of total compensation represents salary and 48% is other remuneration. Insurance Australia 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.

Insurance Australia Group Limited's Growth

Over the past three years, Insurance Australia Group Limited has seen its earnings per share (EPS) grow by 22% per year. In the last year, its revenue is up 16%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's a real positive to see this sort of revenue growth in a single year. That suggests a healthy and growing business. 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 Insurance Australia Group Limited Been A Good Investment?

With a total shareholder return of 31% over three years, Insurance Australia Group Limited shareholders would, in general, be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

While the company seems to be headed in the right direction performance-wise, there's always room for improvement. If it manages to keep up the current streak, CEO remuneration could well be one of shareholders' least concerns. In fact, strategic decisions that could impact the future of the business might be a far more interesting topic for investors as it would help them set their longer-term expectations.

If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Insurance Australia Group.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.