Why Zurich Insurance Group's (VTX:ZURN) CEO Pay Matters

Simply Wall St
November 26, 2020

This article will reflect on the compensation paid to Mario Greco who has served as CEO of Zurich Insurance Group AG (VTX:ZURN) since 2016. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Zurich Insurance Group.

View our latest analysis for Zurich Insurance Group

How Does Total Compensation For Mario Greco Compare With Other Companies In The Industry?

At the time of writing, our data shows that Zurich Insurance Group AG has a market capitalization of CHF56b, and reported total annual CEO compensation of CHF9.6m for the year to December 2019. That's a modest increase of 7.4% on the prior year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at CHF1.8m.

For comparison, other companies in the industry with market capitalizations above CHF7.3b, reported a median total CEO compensation of CHF4.6m. This suggests that Mario Greco is paid more than the median for the industry. Furthermore, Mario Greco directly owns CHF23m worth of shares in the company, implying that they are deeply invested in the company's success.

Component20192018Proportion (2019)
Salary CHF1.8m CHF1.6m 18%
Other CHF7.8m CHF7.3m 82%
Total CompensationCHF9.6m CHF8.9m100%

Speaking on an industry level, nearly 35% of total compensation represents salary, while the remainder of 65% is other remuneration. Zurich Insurance Group 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.

SWX:ZURN CEO Compensation November 26th 2020

A Look at Zurich Insurance Group AG's Growth Numbers

Zurich Insurance Group AG has seen its earnings per share (EPS) increase by 2.3% a year over the past three years. In the last year, its revenue is down 6.1%.

We would prefer it if there was revenue growth, but the modest EPSgrowth gives us some relief. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Zurich Insurance Group AG Been A Good Investment?

We think that the total shareholder return of 53%, over three years, would leave most Zurich Insurance Group AG 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.

In Summary...

As previously discussed, Mario is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. Importantly though, shareholder returns for the last three years have been excellent. That's why we were hoping EPS growth would match this growth, but sadly that is not the case. So, although we would've liked to see stronger EPS growth, positive investor returns lead us to believe CEO compensation is reasonable.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 2 warning signs for Zurich Insurance Group that investors should be aware of in a dynamic business environment.

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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