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How Should Investors Feel About RSA Insurance Group plc's (LON:RSA) CEO Pay?

Simply Wall St

Stephen A. Hester became the CEO of RSA Insurance Group plc (LON:RSA) in 2014. 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. This method should give us information to assess how appropriately the company pays the CEO.

See our latest analysis for RSA Insurance Group

How Does Stephen A. Hester's Compensation Compare With Similar Sized Companies?

Our data indicates that RSA Insurance Group plc is worth UK£5.4b, and total annual CEO compensation was reported as UK£4.1m for the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at UK£1.0m. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We looked at a group of companies with market capitalizations from UK£3.1b to UK£9.3b, and the median CEO total compensation was UK£2.7m.

Thus we can conclude that Stephen A. Hester receives more in total compensation than the median of a group of companies in the same market, and of similar size to RSA Insurance Group plc. However, this doesn't necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.

You can see a visual representation of the CEO compensation at RSA Insurance Group, below.

LSE:RSA CEO Compensation, November 1st 2019

Is RSA Insurance Group plc Growing?

RSA Insurance Group plc has increased its earnings per share (EPS) by an average of 44% a year, over the last three years (using a line of best fit). In the last year, its revenue changed by just 1.0%.

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. You might want to check this free visual report on analyst forecasts for future earnings.

Has RSA Insurance Group plc Been A Good Investment?

RSA Insurance Group plc has not done too badly by shareholders, with a total return of 6.9%, over three years. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

We examined the amount RSA Insurance Group plc 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.

However, the earnings per share growth over three years is certainly impressive. We also think investors are doing ok, over the same time period. While it may be worth researching further, we don't see a problem with the CEO pay, given the good EPS growth. So you may want to check if insiders are buying RSA Insurance Group shares with their own money (free access).

If you want to buy a stock that is better than RSA Insurance Group, this free list of high return, low debt companies is a great place to look.

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.