This Is Why Donegal Group Inc.'s (NASDAQ:DGIC.A) CEO Can Expect A Bump Up In Their Pay Packet

Shareholders will be pleased by the robust performance of Donegal Group Inc. (NASDAQ:DGIC.A) recently and this will be kept in mind in the upcoming AGM on 15 April 2021. The focus will probably be on the future strategic initiatives that the board and management will put in place to improve the business rather than executive remuneration when they cast their votes on company resolutions. In our analysis below, we discuss why we think the CEO compensation looks acceptable and the case for a raise.

See our latest analysis for Donegal Group

Comparing Donegal Group Inc.'s CEO Compensation With the industry

According to our data, Donegal Group Inc. has a market capitalization of US$454m, and paid its CEO total annual compensation worth US$1.3m over the year to December 2020. That's a notable increase of 25% on last year. In particular, the salary of US$665.0k, makes up a fairly large portion of the total compensation being paid to the CEO.

On comparing similar companies from the same industry with market caps ranging from US$200m to US$800m, we found that the median CEO total compensation was US$2.0m. That is to say, Kevin Burke is paid under the industry median. Moreover, Kevin Burke also holds US$134k worth of Donegal Group stock directly under their own name.

Component	2020	2019	Proportion (2020)
Salary	US$665k	US$630k	52%
Other	US$625k	US$404k	48%
Total Compensation	US$1.3m	US$1.0m	100%

Speaking on an industry level, nearly 16% of total compensation represents salary, while the remainder of 84% is other remuneration. Donegal Group 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.

Donegal Group Inc.'s Growth

Donegal Group Inc.'s earnings per share (EPS) grew 91% per year over the last three years. Its revenue is down 4.2% over the previous year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. While it would be good to see revenue growth, profits matter more in the end. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Donegal Group Inc. Been A Good Investment?

Donegal Group Inc. has generated a total shareholder return of 14% over three years, so most shareholders would be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

To Conclude...

While the company seems to be headed in the right direction performance-wise, there's always room for improvement. Assuming the business continues to grow at a good clip, few shareholders would raise any objections to the CEO's remuneration. Rather, investors would more likely want to engage on discussions related to key strategic initiatives and future growth opportunities for the company and set their longer-term expectations.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. That's why we did our research, and identified 2 warning signs for Donegal Group (of which 1 is significant!) that you should know about in order to have a holistic understanding of the stock.

Important note: Donegal 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. 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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