Performance at Hiscox Ltd (LON:HSX) has not been particularly rosy recently and shareholders will likely be holding CEO Bronek Masojada and the board accountable for this. There is an opportunity for shareholders to influence management to turn the performance around by voting on resolutions such as executive remuneration at the AGM coming up on 13 May 2021. From our analysis below, we think CEO compensation looks appropriate for now.
Comparing Hiscox Ltd's CEO Compensation With the industry
Our data indicates that Hiscox Ltd has a market capitalization of UK£2.9b, and total annual CEO compensation was reported as US$979k for the year to December 2020. That's just a smallish increase of 5.9% on last year. Notably, the salary which is US$886.9k, represents most of the total compensation being paid.
On examining similar-sized companies in the industry with market capitalizations between UK£1.4b and UK£4.6b, we discovered that the median CEO total compensation of that group was US$1.8m. In other words, Hiscox pays its CEO lower than the industry median. Furthermore, Bronek Masojada directly owns UK£25m worth of shares in the company, implying that they are deeply invested in the company's success.
Speaking on an industry level, nearly 39% of total compensation represents salary, while the remainder of 61% is other remuneration. Hiscox is paying a higher share of its remuneration through a salary in comparison to the overall industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
A Look at Hiscox Ltd's Growth Numbers
Hiscox Ltd has reduced its earnings per share by 95% a year over the last three years. Its revenue is up 3.0% over the last year.
The decline in EPS is a bit concerning. The fairly low revenue growth fails to impress given that the EPS is down. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Hiscox Ltd Been A Good Investment?
Few Hiscox Ltd shareholders would feel satisfied with the return of -44% over three years. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We did our research and spotted 1 warning sign for Hiscox that investors should look into moving forward.
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.
If you decide to trade Hiscox, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account. Promoted
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.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.