Why We Think Argo Group Limited's (LON:ARGO) CEO Compensation Is Not Excessive At All

Despite Argo Group Limited's (LON:ARGO) share price growing positively in the past few years, the per-share earnings growth has not grown to investors' expectations, suggesting that there could be other factors at play driving the share price. Some of these issues will occupy shareholders' minds as the AGM rolls around on 30 September 2021. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.

View our latest analysis for Argo Group

How Does Total Compensation For Kyriakos Rialas Compare With Other Companies In The Industry?

According to our data, Argo Group Limited has a market capitalization of UK£7.4m, and paid its CEO total annual compensation worth US$217k over the year to December 2020. That's mostly flat as compared to the prior year's compensation. It is worth noting that the CEO compensation consists entirely of the salary, worth US$217k.

On comparing similar-sized companies in the industry with market capitalizations below UK£146m, we found that the median total CEO compensation was US$243k. So it looks like Argo Group compensates Kyriakos Rialas in line with the median for the industry. Moreover, Kyriakos Rialas also holds UK£1.7m worth of Argo Group stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2020	2019	Proportion (2020)
Salary	US$217k	US$213k	100%
Other	-	-	-
Total Compensation	US$217k	US$213k	100%

Speaking on an industry level, nearly 48% of total compensation represents salary, while the remainder of 52% is other remuneration. Speaking on a company level, Argo Group prefers to tread along a traditional path, disbursing all compensation through a salary. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

A Look at Argo Group Limited's Growth Numbers

Over the last three years, Argo Group Limited has shrunk its earnings per share by 19% per year. Its revenue is up 4.4% over the last year.

Overall this is not a very positive result for shareholders. The fairly low revenue growth fails to impress given that the EPS is down. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 Argo Group Limited Been A Good Investment?

Argo Group Limited has not done too badly by shareholders, with a total return of 7.0%, over three years. It would be nice to see that metric improve in the future. In light of that, investors might probably want to see an improvement on their returns before they feel generous about increasing the CEO remuneration.

In Summary...

Argo Group rewards its CEO solely through a salary, ignoring non-salary benefits completely. Shareholder returns, while positive, should be looked at along with earnings, which have not grown at all recently. This makes us think the share price momentum may slow in the future. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 4 warning signs for Argo Group (of which 1 doesn't sit too well with us!) 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. 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.
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