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Is Aon plc (NYSE:AON) Overpaying Its CEO?

Simply Wall St

Greg Case became the CEO of Aon plc (NYSE:AON) in 2005. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.

See our latest analysis for Aon

How Does Greg Case's Compensation Compare With Similar Sized Companies?

According to our data, Aon plc has a market capitalization of US$49b, and paid its CEO total annual compensation worth US$16m over the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$1.5m. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. We looked at a group of companies with market capitalizations over US$8.0b and the median CEO total compensation was US$11m. Once you start looking at very large companies, you need to take a broader range, because there simply aren't that many of them.

Thus we can conclude that Greg Case receives more in total compensation than the median of a group of large companies in the same market as Aon plc. However, this doesn't necessarily mean the pay is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.

You can see a visual representation of the CEO compensation at Aon, below.

NYSE:AON CEO Compensation, December 21st 2019

Is Aon plc Growing?

Aon plc has increased its earnings per share (EPS) by an average of 8.9% a year, over the last three years (using a line of best fit). The trailing twelve months of revenue was pretty much the same as the prior period.

I would argue that the lack of revenue growth in the last year is less than ideal, but I'm happy with the EPS growth. These two metric are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. Shareholders might be interested in this free visualization of analyst forecasts.

Has Aon plc Been A Good Investment?

Most shareholders would probably be pleased with Aon plc for providing a total return of 92% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

We compared total CEO remuneration at Aon plc with the amount paid at other large companies. Our data suggests that it pays above the median CEO pay within that group.

While we generally prefer to see stronger EPS growth, there's no arguing with the strong returns to shareholders, over the last three years. Considering this fine result for investors, we daresay the CEO compensation might be apt. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Aon (free visualization of insider trades).

Important note: Aon may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.