Why We Think Essent Group Ltd.'s (NYSE:ESNT) CEO Compensation Is Not Excessive At All

Key Insights

• Essent Group's Annual General Meeting to take place on 1st of May
• CEO Mark Casale's total compensation includes salary of US$1.00m
• The total compensation is similar to the average for the industry
• Essent Group's EPS grew by 19% over the past three years while total shareholder return over the past three years was 7.1%

Performance at Essent Group Ltd. (NYSE:ESNT) has been reasonably good and CEO Mark Casale has done a decent job of steering the company in the right direction. As shareholders go into the upcoming AGM on 1st of May, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. We present our case of why we think CEO compensation looks fair.

See our latest analysis for Essent Group

How Does Total Compensation For Mark Casale Compare With Other Companies In The Industry?

According to our data, Essent Group Ltd. has a market capitalization of US$5.7b, and paid its CEO total annual compensation worth US$8.9m over the year to December 2023. That is, the compensation was roughly the same as last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.0m.

On examining similar-sized companies in the American Diversified Financial industry with market capitalizations between US$4.0b and US$12b, we discovered that the median CEO total compensation of that group was US$8.8m. From this we gather that Mark Casale is paid around the median for CEOs in the industry. Moreover, Mark Casale also holds US$128m worth of Essent Group stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	US$1.0m	US$1.0m	11%
Other	US$7.9m	US$7.9m	89%
Total Compensation	US$8.9m	US$8.9m	100%

On an industry level, around 15% of total compensation represents salary and 85% is other remuneration. It's interesting to note that Essent Group allocates a smaller portion of compensation to salary in comparison 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.

Essent Group Ltd.'s Growth

Essent Group Ltd.'s earnings per share (EPS) grew 19% per year over the last three years. It achieved revenue growth of 8.4% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's nice to see revenue heading northwards, as this is consistent with healthy business conditions. 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 Essent Group Ltd. Been A Good Investment?

With a total shareholder return of 7.1% over three years, Essent Group Ltd. has done okay by shareholders, but there's always room for improvement. 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...

Seeing that the company has put up a decent performance, only a few shareholders, if any at all, might have questions about the CEO pay in the upcoming AGM. However, we still think that any proposed increase in CEO compensation will be examined closely to make sure the compensation is appropriate and linked to performance.

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 Essent Group that investors should look into moving forward.

Important note: Essent Group 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.