Most Shareholders Will Probably Agree With Safety Insurance Group, Inc.'s (NASDAQ:SAFT) CEO Compensation

Performance at Safety Insurance Group, Inc. (NASDAQ:SAFT) has been reasonably good and CEO George Murphy has done a decent job of steering the company in the right direction. As shareholders go into the upcoming AGM on 19 May 2021, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. Here is our take on why we think the CEO compensation looks appropriate.

Check out our latest analysis for Safety Insurance Group

How Does Total Compensation For George Murphy Compare With Other Companies In The Industry?

According to our data, Safety Insurance Group, Inc. has a market capitalization of US$1.3b, and paid its CEO total annual compensation worth US$3.5m over the year to December 2020. That's a fairly small increase of 3.9% over the previous year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$790k.

In comparison with other companies in the industry with market capitalizations ranging from US$1.0b to US$3.2b, the reported median CEO total compensation was US$3.5m. From this we gather that George Murphy is paid around the median for CEOs in the industry. Moreover, George Murphy also holds US$7.2m worth of Safety Insurance Group stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2020	2019	Proportion (2020)
Salary	US$790k	US$774k	23%
Other	US$2.7m	US$2.5m	77%
Total Compensation	US$3.5m	US$3.3m	100%

On an industry level, roughly 17% of total compensation represents salary and 83% is other remuneration. According to our research, Safety Insurance Group has allocated a higher percentage of pay to salary in comparison to the wider industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Safety Insurance Group, Inc.'s Growth

Over the past three years, Safety Insurance Group, Inc. has seen its earnings per share (EPS) grow by 45% per year. In the last year, its revenue is up 6.1%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see modest revenue growth, suggesting the underlying business is healthy. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Safety Insurance Group, Inc. Been A Good Investment?

Safety Insurance Group, Inc. has generated a total shareholder return of 14% over three years, so most shareholders would be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

The company's decent performance might have made most shareholders happy, possibly making CEO remuneration the least of the concerns to be discussed in the upcoming AGM. Despite the pleasing results, we still think that any proposed increases to CEO compensation will be examined based on a case by case basis and linked to performance outcomes.

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 Safety Insurance Group that you should be aware of before investing.

Important note: Safety Insurance 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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