Our View On Atlantic American's (NASDAQ:AAME) CEO Pay

By
Simply Wall St
Published
November 10, 2020

Hilton Howell became the CEO of Atlantic American Corporation (NASDAQ:AAME) in 1995, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Atlantic American pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

View our latest analysis for Atlantic American

How Does Total Compensation For Hilton Howell Compare With Other Companies In The Industry?

At the time of writing, our data shows that Atlantic American Corporation has a market capitalization of US$44m, and reported total annual CEO compensation of US$1.3m for the year to December 2019. We note that's an increase of 21% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$500k.

On comparing similar-sized companies in the industry with market capitalizations below US$200m, we found that the median total CEO compensation was US$561k. Accordingly, our analysis reveals that Atlantic American Corporation pays Hilton Howell north of the industry median. Furthermore, Hilton Howell directly owns US$2.6m worth of shares in the company, implying that they are deeply invested in the company's success.

Component20192018Proportion (2019)
Salary US$500k US$500k 39%
Other US$776k US$559k 61%
Total CompensationUS$1.3m US$1.1m100%

Talking in terms of the industry, salary represented approximately 16% of total compensation out of all the companies we analyzed, while other remuneration made up 84% of the pie. It's interesting to note that Atlantic American pays out a greater portion of remuneration through salary, compared to the industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

NasdaqGM:AAME CEO Compensation November 10th 2020

Atlantic American Corporation's Growth

Over the last three years, Atlantic American Corporation has shrunk its earnings per share by 89% per year. It saw its revenue drop 2.3% over the last year.

The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Atlantic American Corporation Been A Good Investment?

Given the total shareholder loss of 39% over three years, many shareholders in Atlantic American Corporation are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be lessto generous with CEO compensation.

In Summary...

As we touched on above, Atlantic American Corporation is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Disappointingly, share price gains over the last three years have failed to materialize. Arguably worse, we've been waiting for positive EPS growth for the last three years. Considering such poor performance, we think shareholders might be concerned if the CEO's compensation were to grow.

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 2 warning signs for Atlantic American (of which 1 is a bit concerning!) 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. 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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