U.S. Markets closed

Does American Financial Group, Inc.’s (NYSE:AFG) CEO Pay Matter?

James Harlett

Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!

Stephen Lindner has been the CEO of American Financial Group, Inc. (NYSE:AFG) since 2005. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. 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. The aim of all this is to consider the appropriateness of CEO pay levels.

View our latest analysis for American Financial Group

How Does Stephen Lindner’s Compensation Compare With Similar Sized Companies?

According to our data, American Financial Group, Inc. has a market capitalization of US$8.5b, and pays its CEO total annual compensation worth US$9.6m. (This is based on the year to 2017). We think total compensation is more important but we note that the CEO salary is lower, at US$1.2m. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$4.0b to US$12b. The median total CEO compensation was US$6.4m.

As you can see, Stephen Lindner is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean American Financial Group, Inc. is paying too much. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

You can see, below, how CEO compensation at American Financial Group has changed over time.

NYSE:AFG CEO Compensation February 8th 19

Is American Financial Group, Inc. Growing?

Over the last three years American Financial Group, Inc. has grown its earnings per share (EPS) by an average of 12% per year (using a line of best fit). Its revenue is up 3.8% over last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. It’s also good to see modest revenue growth, suggesting the underlying business is healthy. You might want to check this free visual report on analyst forecasts for future earnings.

Has American Financial Group, Inc. Been A Good Investment?

I think that the total shareholder return of 66%, over three years, would leave most American Financial Group, Inc. shareholders smiling. 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…

We compared the total CEO remuneration paid by American Financial Group, Inc., and compared it to remuneration at a group of similar sized companies. Our data suggests that it pays above the median CEO pay within that group.

Importantly, though, the company has impressed with its earnings per share growth, over three years. In addition, shareholders have done well over the same time period. So, considering this good performance, the CEO compensation may be quite appropriate. Shareholders may want to check for free if American Financial Group insiders are buying or selling shares.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.