It Looks Like United Fire Group, Inc.'s (NASDAQ:UFCS) CEO May Expect Their Salary To Be Put Under The Microscope

Shareholders will probably not be too impressed with the underwhelming results at United Fire Group, Inc. (NASDAQ:UFCS) recently. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 19 May 2021. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. We present the case why we think CEO compensation is out of sync with company performance.

Check out our latest analysis for United Fire Group

Comparing United Fire Group, Inc.'s CEO Compensation With the industry

At the time of writing, our data shows that United Fire Group, Inc. has a market capitalization of US$790m, and reported total annual CEO compensation of US$2.1m for the year to December 2020. That's a slight decrease of 6.5% on the prior year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$800k.

For comparison, other companies in the same industry with market capitalizations ranging between US$400m and US$1.6b had a median total CEO compensation of US$2.9m. So it looks like United Fire Group compensates Randy Ramlo in line with the median for the industry. Moreover, Randy Ramlo also holds US$1.9m worth of United Fire Group stock directly under their own name.

Component	2020	2019	Proportion (2020)
Salary	US$800k	US$800k	38%
Other	US$1.3m	US$1.5m	62%
Total Compensation	US$2.1m	US$2.3m	100%

On an industry level, around 17% of total compensation represents salary and 83% is other remuneration. According to our research, United Fire Group has allocated a higher percentage of pay to salary in comparison to the wider industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at United Fire Group, Inc.'s Growth Numbers

United Fire Group, Inc. has reduced its earnings per share by 105% a year over the last three years. It achieved revenue growth of 11% over the last year.

Overall this is not a very positive result for shareholders. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for us to put aside my concerns around EPS. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has United Fire Group, Inc. Been A Good Investment?

With a total shareholder return of -30% over three years, United Fire Group, Inc. shareholders would by and large be disappointed. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 1 warning sign for United Fire Group that investors should look into moving forward.

Important note: United Fire 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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