Is Brown & Brown, Inc.'s (NYSE:BRO) CEO Paid Enough Relative To Peers?
In 2009 J. Brown was appointed CEO of Brown & Brown, Inc. (NYSE:BRO). First, this article will compare CEO compensation with compensation at other large companies. Next, we'll consider growth that the business demonstrates. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.
Check out our latest analysis for Brown & Brown
How Does J. Brown's Compensation Compare With Similar Sized Companies?
According to our data, Brown & Brown, Inc. has a market capitalization of US$11b, and paid its CEO total annual compensation worth US$4.2m over the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$1.0m. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. When we examined a group of companies with market caps over US$8.0b, we found that their median CEO total compensation was US$11m. There aren't very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.
This would give shareholders a good impression of the company, since most large companies pay more, leaving less for shareholders. However, before we heap on the praise, we should delve deeper to understand business performance.
The graphic below shows how CEO compensation at Brown & Brown has changed from year to year.
Is Brown & Brown, Inc. Growing?
Brown & Brown, Inc. has increased its earnings per share (EPS) by an average of 16% a year, over the last three years (using a line of best fit). Its revenue is up 17% over last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. Shareholders might be interested in this free visualization of analyst forecasts.
Has Brown & Brown, Inc. Been A Good Investment?
Boasting a total shareholder return of 81% over three years, Brown & Brown, Inc. 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.
In Summary...
It appears that Brown & Brown, Inc. remunerates its CEO below most large companies.
Considering the underlying business is growing earnings, this would suggest the pay is modest. The strong history of shareholder returns might even have some thinking that J. Brown deserves a raise! It's not often we see shareholders do so well, and yet the CEO is paid modestly. The cherry on top would be if company insiders are buying shares with their own money. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Brown & Brown (free visualization of insider trades).
Important note: Brown & Brown 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.
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