In 2013 Dan Glaser was appointed CEO of Marsh & McLennan Companies, Inc. (NYSE:MMC). This analysis aims first to contrast CEO compensation with other large companies. After that, we will consider the growth in the business. 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.
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How Does Dan Glaser's Compensation Compare With Similar Sized Companies?
Our data indicates that Marsh & McLennan Companies, Inc. is worth US$50b, and total annual CEO compensation is US$17m. (This figure is for the year to December 2018). That's just a smallish increase of 1.6% on last year. While we always look at total compensation first, we note that the salary component is less, at US$1.5m. We took a group of companies with market capitalizations over US$8.0b, and calculated the median CEO total compensation to be US$12m. There aren't very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.
It would therefore appear that Marsh & McLennan Companies, Inc. pays Dan Glaser more than the median CEO remuneration at large companies, in the same market. However, this fact alone doesn't mean the remuneration is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
You can see a visual representation of the CEO compensation at Marsh & McLennan Companies, below.
Is Marsh & McLennan Companies, Inc. Growing?
Over the last three years, Marsh & McLennan Companies, Inc. has not seen its earnings per share change much, though they have deteriorated slightly, according to a line of best fit. It achieved revenue growth of 3.4% over the last year.
The lack of earnings per share growth in the last three years is unimpressive. The modest increase in revenue in the last year isn't enough to make me overlook the disappointing change in earnings per share. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. You might want to check this free visual report on analyst forecasts for future earnings.
Has Marsh & McLennan Companies, Inc. Been A Good Investment?
Most shareholders would probably be pleased with Marsh & McLennan Companies, Inc. for providing a total return of 57% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
We compared the total CEO remuneration paid by Marsh & McLennan Companies, Inc., and compared it to remuneration at a group of other large companies. Our data suggests that it pays above the median CEO pay within that group.
Earnings per share have not grown in three years, and the revenue growth fails to impress us.
On the other hand, returns have been good, so the company is doing something right. So on this analysis we'd stop short of criticizing the level of CEO compensation. So you may want to check if insiders are buying Marsh & McLennan Companies shares with their own money (free access).
Important note: Marsh & McLennan Companies may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
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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. Thank you for reading.