In 2013 Tom McInerney was appointed CEO of Genworth Financial, Inc. (NYSE:GNW). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we’ll look at a snap shot of the business growth. 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.
How Does Tom McInerney’s Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Genworth Financial, Inc. has a market cap of US$2.1b, and reported total annual CEO compensation of US$9.3m for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$997k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$1.0b to US$3.2b. The median total CEO compensation was US$3.7m.
It would therefore appear that Genworth Financial, Inc. pays Tom McInerney more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn’t mean the remuneration is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.
The graphic below shows how CEO compensation at Genworth Financial has changed from year to year.
Is Genworth Financial, Inc. Growing?
On average over the last three years, Genworth Financial, Inc. has grown earnings per share (EPS) by 32% each year (using a line of best fit). Its revenue is down 4.0% over last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. The lack of revenue growth isn’t ideal, but it is the bottom line that counts most in business. Shareholders might be interested in this free visualization of analyst forecasts.
Has Genworth Financial, Inc. Been A Good Investment?
Genworth Financial, Inc. has not done too badly by shareholders, with a total return of 5.1%, over three years. But they would probably prefer not to see CEO compensation far in excess of the median.
We compared total CEO remuneration at Genworth Financial, Inc. with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of that group.
However, the earnings per share growth over three years is certainly impressive. We also note that, over the same time frame, shareholder returns haven’t been bad. So, considering the EPS growth we do not wish to criticize the level of CEO compensation, though we’d recommend further research on management. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Genworth Financial (free visualization of insider trades).
If you want to buy a stock that is better than Genworth Financial, this free list of high return, low debt companies is a great place to look.
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