Bruce Lucas has been the CEO of Heritage Insurance Holdings, Inc. (NYSE:HRTG) since 2014, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Heritage Insurance Holdings.
Comparing Heritage Insurance Holdings, Inc.'s CEO Compensation With the industry
Our data indicates that Heritage Insurance Holdings, Inc. has a market capitalization of US$348m, and total annual CEO compensation was reported as US$6.1m for the year to December 2019. We note that's a decrease of 47% compared to last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$2.3m.
In comparison with other companies in the industry with market capitalizations ranging from US$200m to US$800m, the reported median CEO total compensation was US$3.0m. Hence, we can conclude that Bruce Lucas is remunerated higher than the industry median. Furthermore, Bruce Lucas directly owns US$9.9m worth of shares in the company, implying that they are deeply invested in the company's success.
On a industry level, around 17% of total compensation represents salary and 83% is other remuneration. Heritage Insurance Holdings pays out 38% of remuneration in the form of a salary, significantly higher than the industry average. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
A Look at Heritage Insurance Holdings, Inc.'s Growth Numbers
Over the last three years, Heritage Insurance Holdings, Inc. has shrunk its earnings per share by 3.0% per year. In the last year, its revenue is up 8.1%.
Few shareholders would be pleased to read that earnings have declined. And the modest revenue growth over 12 months isn't much comfort against the reduced earnings per share. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 Heritage Insurance Holdings, Inc. Been A Good Investment?
Heritage Insurance Holdings, Inc. has not done too badly by shareholders, with a total return of 7.4%, over three years. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.
As previously discussed, Bruce is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. Unfortunately, earnings per share has not grown in three years, failing to impress us. And while shareholder returns have been respectable, they have hardly been superb. So we think more research is needed, but we don't think the CEO is underpaid.
CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 1 warning sign for Heritage Insurance Holdings that investors should think about before committing capital to this stock.
Important note: Heritage Insurance Holdings 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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