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Does Genworth Mortgage Insurance Australia Limited's (ASX:GMA) CEO Pay Compare Well With Peers?

Simply Wall St

Georgette Nicholas has been the CEO of Genworth Mortgage Insurance Australia Limited (ASX:GMA) since 2016. First, this article will compare CEO compensation with compensation at similar sized companies. Then we'll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.

See our latest analysis for Genworth Mortgage Insurance Australia

How Does Georgette Nicholas's Compensation Compare With Similar Sized Companies?

Our data indicates that Genworth Mortgage Insurance Australia Limited is worth AU$1.3b, and total annual CEO compensation is AU$2.0m. (This is based on the year to December 2018). While we always look at total compensation first, we note that the salary component is less, at AU$858k. When we examined a selection of companies with market caps ranging from AU$583m to AU$2.3b, we found the median CEO total compensation was AU$1.4m.

Thus we can conclude that Georgette Nicholas receives more in total compensation than the median of a group of companies in the same market, and of similar size to Genworth Mortgage Insurance Australia Limited. However, this doesn't necessarily mean the pay is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.

You can see, below, how CEO compensation at Genworth Mortgage Insurance Australia has changed over time.

ASX:GMA CEO Compensation, September 11th 2019

Is Genworth Mortgage Insurance Australia Limited Growing?

Over the last three years Genworth Mortgage Insurance Australia Limited has shrunk its earnings per share by an average of 24% per year (measured with a line of best fit). Its revenue is up 8.2% over last year.

Sadly for shareholders, earnings per share are actually down, over three years. And the modest revenue growth over 12 months isn't much comfort against the reduced earnings per share. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Shareholders might be interested in this free visualization of analyst forecasts.

Has Genworth Mortgage Insurance Australia Limited Been A Good Investment?

I think that the total shareholder return of 59%, over three years, would leave most Genworth Mortgage Insurance Australia Limited shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

We examined the amount Genworth Mortgage Insurance Australia Limited pays its CEO, and compared it to the amount paid by similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.

Earnings per share have not grown in three years, and the revenue growth fails to impress us.

But clearly there are some positives, because investors have done well over the same time frame. Considering this, shareholders are probably not too worried about the CEO compensation. Shareholders may want to check for free if Genworth Mortgage Insurance Australia insiders are buying or selling shares.

Important note: Genworth Mortgage Insurance Australia 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 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. Thank you for reading.