Reinsurance Group of America, Incorporated's (NYSE:RGA) CEO Might Not Expect Shareholders To Be So Generous This Year
The results at Reinsurance Group of America, Incorporated (NYSE:RGA) have been quite disappointing recently and CEO Anna Manning bears some responsibility for this. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 19 May 2021. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. The data we present below explains why we think CEO compensation is not consistent with recent performance.
See our latest analysis for Reinsurance Group of America
Comparing Reinsurance Group of America, Incorporated's CEO Compensation With the industry
According to our data, Reinsurance Group of America, Incorporated has a market capitalization of US$8.6b, and paid its CEO total annual compensation worth US$9.0m over the year to December 2020. We note that's an increase of 11% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.0m.
On examining similar-sized companies in the industry with market capitalizations between US$4.0b and US$12b, we discovered that the median CEO total compensation of that group was US$7.8m. From this we gather that Anna Manning is paid around the median for CEOs in the industry. Furthermore, Anna Manning directly owns US$7.0m worth of shares in the company, implying that they are deeply invested in the company's success.
Component | 2020 | 2019 | Proportion (2020) |
Salary | US$1.0m | US$1.0m | 11% |
Other | US$8.0m | US$7.1m | 89% |
Total Compensation | US$9.0m | US$8.1m | 100% |
Speaking on an industry level, nearly 17% of total compensation represents salary, while the remainder of 83% is other remuneration. It's interesting to note that Reinsurance Group of America allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
A Look at Reinsurance Group of America, Incorporated's Growth Numbers
Over the last three years, Reinsurance Group of America, Incorporated has shrunk its earnings per share by 30% per year. In the last year, its revenue is up 10%.
The decline in EPS is a bit concerning. There's no doubt that the silver lining is that revenue is up. But it isn't sufficiently fast growth to overlook the fact that EPS has gone backwards over three years. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Reinsurance Group of America, Incorporated Been A Good Investment?
Given the total shareholder loss of 11% over three years, many shareholders in Reinsurance Group of America, Incorporated are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
To Conclude...
Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 1 warning sign for Reinsurance Group of America that investors should think about before committing capital to this stock.
Important note: Reinsurance Group of America 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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