Greg Case has been the CEO of Aon plc (NYSE:AON) since 2005. This analysis aims first to contrast CEO compensation with other large companies. Then we'll look at a snap shot of the business growth. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.
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How Does Greg Case's Compensation Compare With Similar Sized Companies?
At the time of writing our data says that Aon plc has a market cap of US$43b, and is paying total annual CEO compensation of US$16m. (This number is for the twelve months until December 2018). We note that's an increase of 11% above last year. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$1.5m. We looked at a group of companies with market capitalizations over US$8.0b and the median CEO total compensation was US$12m. (We took a wide range because the CEOs of massive companies tend to be paid similar amounts - even though some are quite a bit bigger than others).
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. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
You can see a visual representation of the CEO compensation at Aon, below.
Is Aon plc Growing?
On average over the last three years, Aon plc has shrunk earnings per share by 13% each year (measured with a line of best fit). In the last year, its revenue is up 1.1%.
Sadly for shareholders, earnings per share are actually down, over three years. The modest increase in revenue in the last year isn't enough to make me overlook the disappointing change in earnings per share. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. It could be important to check this free visual depiction of what analysts expect for the future.
Has Aon plc Been A Good Investment?
I think that the total shareholder return of 75%, over three years, would leave most Aon plc shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
We compared total CEO remuneration at Aon plc with the amount paid at other large companies. We found that it pays well over the median amount paid in the benchmark group.
We think many shareholders would be underwhelmed with the business growth over the last three years.
However, we can't argue with the strong returns to shareholders, over the same time period. Considering this, shareholders are probably not too worried about the CEO compensation. Shareholders may want to check for free if Aon insiders are buying or selling shares.
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.
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.
If you spot an error that warrants correction, please contact the editor at email@example.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. Thank you for reading.