Does Aflac Incorporated’s (NYSE:AFL) CEO Pay Reflect Performance?

In 1990 Dan Amos was appointed CEO of Aflac Incorporated (NYSE:AFL). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. Next, we’ll consider growth that the business demonstrates. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.

Check out our latest analysis for Aflac

How Does Dan Amos’s Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Aflac Incorporated has a market cap of US$34b, and is paying total annual CEO compensation of US$23m. (This number is for the twelve months until 2017). We think total compensation is more important but we note that the CEO salary is lower, at US$1.4m. We took a group of companies with market capitalizations over US$8.0b, and calculated the median CEO compensation to be US$11m. Once you start looking at very large companies, you need to take a broader range, because there simply aren’t that many of them.

Thus we can conclude that Dan Amos receives more in total compensation than the median of a group of large companies in the same market as Aflac Incorporated. However, this doesn’t necessarily mean the pay is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous. So this free visual report on analyst forecasts could hold they key to an excellent investment decision.

You can see a visual representation of the CEO compensation at Aflac, below.

NYSE:AFL CEO Compensation January 8th 19
NYSE:AFL CEO Compensation January 8th 19

Is Aflac Incorporated Growing?

Aflac Incorporated has increased its earnings per share (EPS) by an average of 32% a year, over the last three years (using a line of best fit). In the last year, its revenue changed by just 0.2%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It’s nice to see a little revenue growth, as this is consistent with healthy business conditions.

Has Aflac Incorporated Been A Good Investment?

Most shareholders would probably be pleased with Aflac Incorporated for providing a total return of 70% over three years. This strong performance might mean some shareholders don’t mind if the CEO were to be paid more than is normal for a company of its size.

In Summary…

We compared the total CEO remuneration paid by Aflac Incorporated, and compared it to remuneration at a group of other large companies. We found that it pays well over the median amount paid in the benchmark group.

Importantly, though, the company has impressed with its earnings per share growth, over three years. Even better, returns to shareholders have been plentiful, over the same time period. Considering this fine result for shareholders, we daresay the CEO compensation might be apt. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Aflac.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.