It Looks Like Unum Group's (NYSE:UNM) CEO May Expect Their Salary To Be Put Under The Microscope

By
Simply Wall St
Published
May 20, 2021
NYSE:UNM
Source: Shutterstock

The results at Unum Group (NYSE:UNM) have been quite disappointing recently and CEO Rick McKenney bears some responsibility for this. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 27 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.

View our latest analysis for Unum Group

Comparing Unum Group's CEO Compensation With the industry

At the time of writing, our data shows that Unum Group has a market capitalization of US$6.1b, and reported total annual CEO compensation of US$13m for the year to December 2020. We note that's an increase of 36% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.1m.

For comparison, other companies in the same industry with market capitalizations ranging between US$4.0b and US$12b had a median total CEO compensation of US$8.1m. Hence, we can conclude that Rick McKenney is remunerated higher than the industry median. What's more, Rick McKenney holds US$16m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component20202019Proportion (2020)
Salary US$1.1m US$1.0m 8%
Other US$12m US$8.7m 92%
Total CompensationUS$13m US$9.7m100%

Speaking on an industry level, nearly 18% of total compensation represents salary, while the remainder of 82% is other remuneration. In Unum Group's case, non-salary compensation represents a greater slice of total remuneration, 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.

ceo-compensation
NYSE:UNM CEO Compensation May 21st 2021

Unum Group's Growth

Over the last three years, Unum Group has shrunk its earnings per share by 5.9% per year. In the last year, its revenue is up 12%.

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. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Unum Group Been A Good Investment?

Given the total shareholder loss of 12% over three years, many shareholders in Unum Group are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 1 warning sign for Unum Group that investors should look into moving forward.

Switching gears from Unum 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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