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What Can We Learn About Travelers Companies' (NYSE:TRV) CEO Compensation?

Simply Wall St
·3 min read

Alan Schnitzer became the CEO of The Travelers Companies, Inc. (NYSE:TRV) in 2015, 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 assess whether Travelers Companies pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

Check out our latest analysis for Travelers Companies

Comparing The Travelers Companies, Inc.'s CEO Compensation With the industry

At the time of writing, our data shows that The Travelers Companies, Inc. has a market capitalization of US$30b, and reported total annual CEO compensation of US$17m for the year to December 2019. We note that's an increase of 15% above last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.0m.

In comparison with other companies in the industry with market capitalizations over US$8.0b , the reported median total CEO compensation was US$14m. This suggests that Travelers Companies remunerates its CEO largely in line with the industry average. Furthermore, Alan Schnitzer directly owns US$20m worth of shares in the company, implying that they are deeply invested in the company's success.

Component

2019

2018

Proportion (2019)

Salary

US$1.0m

US$1.0m

6%

Other

US$16m

US$14m

94%

Total Compensation

US$17m

US$15m

100%

Speaking on an industry level, nearly 16% of total compensation represents salary, while the remainder of 84% is other remuneration. In Travelers Companies' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

ceo-compensation
ceo-compensation

A Look at The Travelers Companies, Inc.'s Growth Numbers

Over the last three years, The Travelers Companies, Inc. has shrunk its earnings per share by 11% per year. In the last year, its revenue is up 1.2%.

Overall this is not a very positive result for shareholders. The fairly low revenue growth fails to impress given that the EPS is down. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has The Travelers Companies, Inc. Been A Good Investment?

Since shareholders would have lost about 2.6% over three years, some The Travelers Companies, Inc. investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

As previously discussed, Alan is compensated close to the median for companies of its size, and which belong to the same industry. In the meantime, the company has reported declining EPS growth and shareholder returns over the last three years. We'd stop short of saying compensation is inappropriate, but we would understand if shareholders had questions regarding a future raise.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 1 warning sign for Travelers Companies that you should be aware of before investing.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.