Kevin O'Donnell became the CEO of RenaissanceRe Holdings Ltd. (NYSE:RNR) in 2013. First, this article will compare CEO compensation with compensation at similar sized companies. 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 process should give us an idea about how appropriately the CEO is paid.
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How Does Kevin O'Donnell's Compensation Compare With Similar Sized Companies?
At the time of writing our data says that RenaissanceRe Holdings Ltd. has a market cap of US$7.7b, and is paying total annual CEO compensation of US$11m. (This figure is for the year to December 2018). That's a notable increase of 39% on last year. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$1.1m. We looked at a group of companies with market capitalizations from US$4.0b to US$12b, and the median CEO total compensation was US$7.0m.
Thus we can conclude that Kevin O'Donnell receives more in total compensation than the median of a group of companies in the same market, and of similar size to RenaissanceRe Holdings Ltd.. 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, below, how CEO compensation at RenaissanceRe Holdings has changed over time.
Is RenaissanceRe Holdings Ltd. Growing?
RenaissanceRe Holdings Ltd. has reduced its earnings per share by an average of 37% a year, over the last three years (measured with a line of best fit). In the last year, its revenue is up 22%.
Unfortunately, earnings per share have trended lower over the last three years. While the revenue growth is good to see, it is outweighed by the fact that earnings per share are down, over three years. 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 RenaissanceRe Holdings Ltd. Been A Good Investment?
I think that the total shareholder return of 55%, over three years, would leave most RenaissanceRe Holdings Ltd. shareholders smiling. 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.
We compared the total CEO remuneration paid by RenaissanceRe Holdings Ltd., and compared it to remuneration at a group of similar sized companies. Our data suggests that it pays above the median CEO pay within that group.
Neither earnings per share nor revenue have been growing sufficiently fast to impress us, over the last three years.
But clearly there are some positives, because investors have done well over the same time frame. Considering this, shareholders are probably not too worried about the CEO compensation. So you may want to check if insiders are buying RenaissanceRe Holdings shares with their own money (free access).
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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