How Does E-L Financial's (TSE:ELF) CEO Pay Compare With Company Performance?
Duncan Newton Jackman became the CEO of E-L Financial Corporation Limited (TSE:ELF) in 2004, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Check out our latest analysis for E-L Financial
Comparing E-L Financial Corporation Limited's CEO Compensation With the industry
According to our data, E-L Financial Corporation Limited has a market capitalization of CA$2.5b, and paid its CEO total annual compensation worth CA$1.6m over the year to December 2019. We note that's an increase of 22% above last year. We note that the salary portion, which stands at CA$983.7k constitutes the majority of total compensation received by the CEO.
On examining similar-sized companies in the industry with market capitalizations between CA$1.3b and CA$4.3b, we discovered that the median CEO total compensation of that group was CA$4.4m. In other words, E-L Financial pays its CEO lower than the industry median. Moreover, Duncan Newton Jackman also holds CA$3.2m worth of E-L Financial stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Component | 2019 | 2018 | Proportion (2019) |
Salary | CA$984k | CA$961k | 63% |
Other | CA$573k | CA$312k | 37% |
Total Compensation | CA$1.6m | CA$1.3m | 100% |
Talking in terms of the industry, salary represented approximately 16% of total compensation out of all the companies we analyzed, while other remuneration made up 84% of the pie. It's interesting to note that E-L Financial pays out a greater portion of remuneration through salary, compared to the industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
E-L Financial Corporation Limited's Growth
Over the last three years, E-L Financial Corporation Limited has shrunk its earnings per share by 44% per year. Its revenue is down 51% over the previous year.
Few shareholders would be pleased to read that earnings have declined. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has E-L Financial Corporation Limited Been A Good Investment?
With a three year total loss of 14% for the shareholders, E-L Financial Corporation Limited would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
To Conclude...
As previously discussed, Duncan Newton is compensated less than what is normal for CEOs of companies of similar size, and which belong to the same industry. While we are quite underwhelmed with earnings growth, the shareholder returns over the past three years have also failed to impress us. Although we wouldn’t say CEO compensation is high, it’s tough to foresee shareholders warming up to thoughts of a bump anytime soon.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 1 warning sign for E-L Financial that you should be aware of before investing.
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.
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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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