How Is Arch Capital Group's (NASDAQ:ACGL) CEO Paid Relative To Peers?

By
Simply Wall St
Published
November 25, 2020
NasdaqGS:ACGL
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Marc Grandisson became the CEO of Arch Capital Group Ltd. (NASDAQ:ACGL) in 2018, 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 evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

Check out our latest analysis for Arch Capital Group

Comparing Arch Capital Group Ltd.'s CEO Compensation With the industry

At the time of writing, our data shows that Arch Capital Group Ltd. has a market capitalization of US$14b, and reported total annual CEO compensation of US$9.4m for the year to December 2019. Notably, that's a decrease of 27% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.0m.

In comparison with other companies in the industry with market capitalizations over US$8.0b , the reported median total CEO compensation was US$14m. In other words, Arch Capital Group pays its CEO lower than the industry median. Furthermore, Marc Grandisson directly owns US$64m worth of shares in the company, implying that they are deeply invested in the company's success.

Component20192018Proportion (2019)
Salary US$1.0m US$983k 11%
Other US$8.4m US$12m 89%
Total CompensationUS$9.4m US$13m100%

On an industry level, roughly 16% of total compensation represents salary and 84% is other remuneration. It's interesting to note that Arch Capital Group allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

ceo-compensation
NasdaqGS:ACGL CEO Compensation November 26th 2020

A Look at Arch Capital Group Ltd.'s Growth Numbers

Arch Capital Group Ltd. has seen its earnings per share (EPS) increase by 38% a year over the past three years. Its revenue is up 21% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Arch Capital Group Ltd. Been A Good Investment?

Arch Capital Group Ltd. has generated a total shareholder return of 4.6% over three years, so most shareholders wouldn't be too disappointed. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

In Summary...

As we touched on above, Arch Capital Group Ltd. is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. But over the last three years, EPS growth has been growing rapidly, which is a great sign for the company. However, shareholder returns have failed to show the same level of growth. We would wish for better returns (whether dividends or capital gains) but we do admire the solidEPS growth on show here. So it's fair to say Marc has done quite well despite modest compensation and shareholders might not be averse to a raise.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 1 warning sign for Arch Capital Group that investors should look into moving forward.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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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