George Murphy became the CEO of Safety Insurance Group, Inc. (NASDAQ:SAFT) in 2016. 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.
How Does George Murphy's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Safety Insurance Group, Inc. has a market cap of US$1.2b, and reported total annual CEO compensation of US$3.3m for the year to December 2019. That's just a smallish increase of 7.3% on last year. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$774k. 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 looked at a group of companies with market capitalizations from US$400m to US$1.6b, and the median CEO total compensation was US$3.2m.
Pay mix tells us a lot about how a company functions versus the wider industry, and it's no different in the case of Safety Insurance Group. On an industry level, roughly 19% of total compensation represents salary and 81% is other remuneration. So it seems like there isn't a significant difference between Safety Insurance Group and the broader market, in terms of salary allocation in the overall compensation package.
That means George Murphy receives fairly typical remuneration for the CEO of a company that size. This doesn't tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context. You can see, below, how CEO compensation at Safety Insurance Group has changed over time.
Is Safety Insurance Group, Inc. Growing?
Safety Insurance Group, Inc. has seen earnings per share (EPS) move positively by an average of 15% a year, over the last three years (using a line of best fit). In the last year, its revenue is down 1.6%.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. We don't have analyst forecasts, but you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Safety Insurance Group, Inc. Been A Good Investment?
With a total shareholder return of 32% over three years, Safety Insurance Group, Inc. shareholders would, in general, be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
George Murphy is paid around the same as most CEOs of similar size companies.
Shareholder returns could be better but shareholders would be pleased with the positive EPS growth. So upon reflection one could argue that the CEO pay is quite reasonable. Looking into other areas, we've picked out 2 warning signs for Safety Insurance Group that investors should think about before committing capital to this stock.
If you want to buy a stock that is better than Safety Insurance Group, this free list of high return, low debt companies is a great place to look.
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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. Thank you for reading.