David Cordani became the CEO of Cigna Corporation (NYSE:CI) in 2009. First, this article will compare CEO compensation with compensation at 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 method should give us information to assess how appropriately the company pays the CEO.
How Does David Cordani's Compensation Compare With Similar Sized Companies?
According to our data, Cigna Corporation has a market capitalization of US$76b, and paid its CEO total annual compensation worth US$19m over the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$1.5m. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. We took a group of companies with market capitalizations over US$8.0b, and calculated the median CEO total compensation to be US$11m. (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).
It would therefore appear that Cigna Corporation pays David Cordani more than the median CEO remuneration at large companies, in the same market. However, this fact alone doesn't mean the remuneration is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.
The graphic below shows how CEO compensation at Cigna has changed from year to year.
Is Cigna Corporation Growing?
Over the last three years Cigna Corporation has grown its earnings per share (EPS) by an average of 17% per year (using a line of best fit). In the last year, its revenue is up 188%.
This demonstrates that the company has been improving recently. A good result. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. It could be important to check this free visual depiction of what analysts expect for the future.
Has Cigna Corporation Been A Good Investment?
Most shareholders would probably be pleased with Cigna Corporation for providing a total return of 43% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
We compared the total CEO remuneration paid by Cigna Corporation, and compared it to remuneration at a group of other large companies. We found that it pays well over the median amount paid in the benchmark 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. Whatever your view on compensation, you might want to check if insiders are buying or selling Cigna shares (free trial).
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.
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