Stephen Lindner became the CEO of American Financial Group, Inc. (NYSE:AFG) in 2005, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
How Does Total Compensation For Stephen Lindner Compare With Other Companies In The Industry?
At the time of writing, our data shows that American Financial Group, Inc. has a market capitalization of US$6.0b, and reported total annual CEO compensation of US$10m for the year to December 2019. That's mostly flat as compared to the prior year's compensation. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.3m.
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$8.5m. So it looks like American Financial Group compensates Stephen Lindner in line with the median for the industry. Furthermore, Stephen Lindner directly owns US$329m worth of shares in the company, implying that they are deeply invested in the company's success.
On an industry level, around 16% of total compensation represents salary and 84% is other remuneration. It's interesting to note that American Financial Group allocates a smaller portion of compensation to salary 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.
A Look at American Financial Group, Inc.'s Growth Numbers
Over the last three years, American Financial Group, Inc. has shrunk its earnings per share by 34% per year. Its revenue is down 2.3% over the previous year.
The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has American Financial Group, Inc. Been A Good Investment?
Given the total shareholder loss of 24% over three years, many shareholders in American Financial Group, Inc. are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
As previously discussed, Stephen is compensated close to the median for companies of its size, and which belong to the same industry. On the other hand, EPS growth and total shareholder return have been negative for the last three years. It's tough to call out the compensation as inappropriate, but shareholders might not favor a raise before company performance improves.
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. We've identified 4 warning signs for American Financial Group that investors should be aware of in a dynamic business environment.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email firstname.lastname@example.org.