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Michael Kehoe became the CEO of Kinsale Capital Group, Inc. (NASDAQ:KNSL) in 2009, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Comparing Kinsale Capital Group, Inc.'s CEO Compensation With the industry
At the time of writing, our data shows that Kinsale Capital Group, Inc. has a market capitalization of US$4.8b, and reported total annual CEO compensation of US$2.0m for the year to December 2019. Notably, that's an increase of 21% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$542k.
For comparison, other companies in the same industry with market capitalizations ranging between US$2.0b and US$6.4b had a median total CEO compensation of US$5.4m. That is to say, Michael Kehoe is paid under the industry median. What's more, Michael Kehoe holds US$208m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Speaking on an industry level, nearly 16% of total compensation represents salary, while the remainder of 84% is other remuneration. Kinsale Capital Group pays out 27% of remuneration in the form of a salary, significantly higher than the industry average. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
A Look at Kinsale Capital Group, Inc.'s Growth Numbers
Kinsale Capital Group, Inc. has seen its earnings per share (EPS) increase by 39% a year over the past three years. It achieved revenue growth of 41% over the last year.
This demonstrates that the company has been improving recently and is good news for the shareholders. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Kinsale Capital Group, Inc. Been A Good Investment?
Most shareholders would probably be pleased with Kinsale Capital Group, Inc. for providing a total return of 384% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
As we touched on above, Kinsale Capital Group, Inc. is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Since EPS growth is heading in a positive direction; many would agree with our assessment that the pay is modest. Plus, we can't ignore the impressive shareholder returns, and won't be surprised if some shareholders were to reward such excellent all-around performance with a raise.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 2 warning signs for Kinsale Capital Group that investors should think about before committing capital to this stock.
Important note: Kinsale Capital Group is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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.
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