Shareholders Will Most Likely Find American Financial Group, Inc.'s (NYSE:AFG) CEO Compensation Acceptable

Under the guidance of CEO Stephen Lindner, American Financial Group, Inc. (NYSE:AFG) has performed reasonably well recently. This is something shareholders will keep in mind as they cast their votes on company resolutions such as executive remuneration in the upcoming AGM on 19 May 2021. We present our case of why we think CEO compensation looks fair.

See our latest analysis for American Financial Group

Comparing American Financial Group, Inc.'s CEO Compensation With the industry

According to our data, American Financial Group, Inc. has a market capitalization of US$11b, and paid its CEO total annual compensation worth US$9.6m over the year to December 2020. Notably, that's a decrease of 8.2% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.3m.

On comparing similar companies in the industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$11m. This suggests that American Financial Group remunerates its CEO largely in line with the industry average. Moreover, Stephen Lindner also holds US$605m worth of American Financial 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$1.3m	US$1.3m	14%
Other	US$8.3m	US$9.2m	86%
Total Compensation	US$9.6m	US$10m	100%

On an industry level, roughly 17% of total compensation represents salary and 83% is other remuneration. It's interesting to note that American Financial 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.

A Look at American Financial Group, Inc.'s Growth Numbers

Over the past three years, American Financial Group, Inc. has seen its earnings per share (EPS) grow by 35% per year. Its revenue is up 17% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has American Financial Group, Inc. Been A Good Investment?

American Financial Group, Inc. has generated a total shareholder return of 30% 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 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 5 warning signs for American Financial Group (of which 1 is significant!) that you should know about in order to have a holistic understanding of the stock.

Switching gears from American Financial Group, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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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