Mike LaRocco became the CEO of State Auto Financial Corporation (NASDAQ:STFC) in 2015. First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Mike LaRocco's Compensation Compare With Similar Sized Companies?
Our data indicates that State Auto Financial Corporation is worth US$1.4b, and total annual CEO compensation was reported as US$6.2m for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$1.0m. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. We examined companies with market caps from US$1.0b to US$3.2b, and discovered that the median CEO total compensation of that group was US$3.9m.
Thus we can conclude that Mike LaRocco receives more in total compensation than the median of a group of companies in the same market, and of similar size to State Auto Financial Corporation. However, this doesn't necessarily mean the pay is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
The graphic below shows how CEO compensation at State Auto Financial has changed from year to year.
Is State Auto Financial Corporation Growing?
Over the last three years State Auto Financial Corporation has grown its earnings per share (EPS) by an average of 37% per year (using a line of best fit). In the last year, its revenue is down 4.9%.
This shows that the company has improved itself over the last few years. Good news for shareholders. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. It could be important to check this free visual depiction of what analysts expect for the future.
Has State Auto Financial Corporation Been A Good Investment?
State Auto Financial Corporation has served shareholders reasonably well, with a total return of 25% over three years. But they would probably prefer not to see CEO compensation far in excess of the median.
We examined the amount State Auto Financial Corporation pays its CEO, and compared it to the amount paid by similar sized companies. Our data suggests that it pays above the median CEO pay within that group.
However we must not forget that the EPS growth has been very strong over three years. Looking at the same time period, we think that the shareholder returns are respectable. You might wish to research management further, but on this analysis, considering the EPS growth, we wouldn't call the CEO pay problematic. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling State Auto Financial (free visualization of insider trades).
If you want to buy a stock that is better than State Auto Financial, this free list of high return, low debt companies is a great place to look.
If you spot an error that warrants correction, please contact the editor at email@example.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.
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