Here's Why We Think Aegon Ltd.'s (AMS:AGN) CEO Compensation Looks Fair for the time being

Key Insights

• Aegon's Annual General Meeting to take place on 12th of June
• Salary of €1.64m is part of CEO Lard Friese's total remuneration
• The total compensation is similar to the average for the industry
• Over the past three years, Aegon's EPS fell by 36% and over the past three years, the total shareholder return was 78%

Aegon Ltd. (AMS:AGN) has exhibited strong share price growth in the past few years. However, its earnings growth has not kept up, suggesting that there may be something amiss. Some of these issues will occupy shareholders' minds as the AGM rolls around on 12th of June. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.

See our latest analysis for Aegon

How Does Total Compensation For Lard Friese Compare With Other Companies In The Industry?

According to our data, Aegon Ltd. has a market capitalization of €10b, and paid its CEO total annual compensation worth €3.9m over the year to December 2023. That's a fairly small increase of 7.8% over the previous year. We think total compensation is more important but our data shows that the CEO salary is lower, at €1.6m.

For comparison, other companies in the the Netherlands Insurance industry with market capitalizations above €7.4b, reported a median total CEO compensation of €3.9m. This suggests that Aegon remunerates its CEO largely in line with the industry average. Furthermore, Lard Friese directly owns €489k worth of shares in the company.

Component	2023	2022	Proportion (2023)
Salary	€1.6m	€1.6m	42%
Other	€2.3m	€2.1m	58%
Total Compensation	€3.9m	€3.6m	100%

Talking in terms of the industry, salary represented approximately 42% of total compensation out of all the companies we analyzed, while other remuneration made up 58% of the pie. Aegon is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at Aegon Ltd.'s Growth Numbers

Over the last three years, Aegon Ltd. has shrunk its earnings per share by 36% per year. In the last year, its revenue is down 9.7%.

The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 Aegon Ltd. Been A Good Investment?

Most shareholders would probably be pleased with Aegon Ltd. for providing a total return of 78% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary...

Despite the strong returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about the stock keeping up its current momentum. 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.

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. That's why we did some digging and identified 1 warning sign for Aegon that investors should think about before committing capital to this stock.

Important note: Aegon 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. 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.