This article will reflect on the compensation paid to Rob Berkley who has served as CEO of W. R. Berkley Corporation (NYSE:WRB) since 2015. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Comparing W. R. Berkley Corporation's CEO Compensation With the industry
According to our data, W. R. Berkley Corporation has a market capitalization of US$12b, and paid its CEO total annual compensation worth US$11m over the year to December 2019. That's a slightly lower by 7.0% over the previous year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.0m.
For comparison, other companies in the industry with market capitalizations above US$8.0b, reported a median total CEO compensation of US$14m. This suggests that W. R. Berkley remunerates its CEO largely in line with the industry average. What's more, Rob Berkley holds US$78m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Talking in terms of the industry, salary represented approximately 16% of total compensation out of all the companies we analyzed, while other remuneration made up 84% of the pie. W. R. Berkley sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
A Look at W. R. Berkley Corporation's Growth Numbers
Over the last three years, W. R. Berkley Corporation has shrunk its earnings per share by 15% per year. It saw its revenue drop 1.5% over the last year.
Few shareholders would be pleased to read that EPS have declined. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation 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 W. R. Berkley Corporation Been A Good Investment?
Boasting a total shareholder return of 48% over three years, W. R. Berkley Corporation has done well by shareholders. 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.
As previously discussed, Rob is compensated close to the median for companies of its size, and which belong to the same industry. Some investors may take issue with this, especially considering shrinking EPS for the past three years. But on the bright side, shareholder returns have moved northward during the same period. We're not saying CEO compensation is too generous, but shrinking EPS is undoubtedly an issue that will have to be addressed.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 2 warning signs for W. R. Berkley that you should be aware of before investing.
Switching gears from W. R. Berkley, 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.
If you decide to trade W. R. Berkley, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account.
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.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email email@example.com.