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Does Markel Corporation's (NYSE:MKL) CEO Pay Reflect Performance?

Simply Wall St

In 2016 Tom Gayner was appointed CEO of Markel Corporation (NYSE:MKL). 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. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.

See our latest analysis for Markel

How Does Tom Gayner's Compensation Compare With Similar Sized Companies?

According to our data, Markel Corporation has a market capitalization of US$16b, and paid its CEO total annual compensation worth US$3.7m over the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$981k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. When we examined a group of companies with market caps over US$8.0b, we found that their median CEO total compensation was US$11m. There aren't very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.

Most shareholders would consider it a positive that Tom Gayner takes less in total compensation than the CEOs of most other large companies, leaving more for shareholders. Though positive, it's important we delve into the performance of the actual business.

You can see, below, how CEO compensation at Markel has changed over time.

NYSE:MKL CEO Compensation, January 23rd 2020

Is Markel Corporation Growing?

On average over the last three years, Markel Corporation has grown earnings per share (EPS) by 14% each year (using a line of best fit). In the last year, its revenue is up 7.1%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. It could be important to check this free visual depiction of what analysts expect for the future.

Has Markel Corporation Been A Good Investment?

With a total shareholder return of 28% over three years, Markel Corporation shareholders would, in general, be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

In Summary...

It appears that Markel Corporation remunerates its CEO below most large companies.

Since the business is growing, many would argue this suggests the pay is modest. While returns over the last few years haven't been top notch, there is nothing to suggest to us that Tom Gayner is overcompensated. Few would complain about reasonable CEO remuneration when the business is growing earnings per share. But it would be nice if insiders were also buying shares. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Markel.

Important note: Markel 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.

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.

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. Thank you for reading.