Duncan Newton Jackman became the CEO of E-L Financial Corporation Limited (TSE:ELF) in 2004, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for E-L Financial.
How Does Total Compensation For Duncan Newton Jackman Compare With Other Companies In The Industry?
According to our data, E-L Financial Corporation Limited has a market capitalization of CA$2.7b, and paid its CEO total annual compensation worth CA$1.6m over the year to December 2019. Notably, that's an increase of 22% over the year before. Notably, the salary which is CA$983.7k, represents most of the total compensation being paid.
On examining similar-sized companies in the industry with market capitalizations between CA$1.3b and CA$4.2b, we discovered that the median CEO total compensation of that group was CA$5.0m. This suggests that Duncan Newton Jackman is paid below the industry median. Furthermore, Duncan Newton Jackman directly owns CA$3.4m worth of shares in the company, implying that they are deeply invested in the company's success.
Talking in terms of the industry, salary represented approximately 21% of total compensation out of all the companies we analyzed, while other remuneration made up 79% of the pie. According to our research, E-L Financial has allocated a higher percentage of pay to salary in comparison to the wider industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
A Look at E-L Financial Corporation Limited's Growth Numbers
Over the last three years, E-L Financial Corporation Limited has shrunk its earnings per share by 17% per year. Its revenue is down 14% over the previous year.
Overall this is not a very positive result for shareholders. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has E-L Financial Corporation Limited Been A Good Investment?
With a three year total loss of 8.4% for the shareholders, E-L Financial Corporation Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
As we touched on above, E-L Financial Corporation Limited is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Over the last three years, shareholder returns have been downright disappointing, and EPSgrowth has been equally disappointing. It's tough to say that Duncan Newton is earning a very high compensation, but shareholders will likely want to see healthier investor returns before agreeing that a raise is in order.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 1 warning sign for E-L Financial that investors should think about before committing capital to this stock.
Important note: E-L Financial is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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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