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How Should Investors Feel About Insurance Australia Group Limited's (ASX:IAG) CEO Pay?

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PG Harmer became the CEO of Insurance Australia Group Limited (ASX:IAG) in 2015. First, this article will compare CEO compensation with compensation at other large companies. Then we'll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.

See our latest analysis for Insurance Australia Group

How Does PG Harmer's Compensation Compare With Similar Sized Companies?

Our data indicates that Insurance Australia Group Limited is worth AU$18b, and total annual CEO compensation is AU$4.9m. (This figure is for the year to June 2018). While we always look at total compensation first, we note that the salary component is less, at AU$1.7m. We looked at a group of companies with market capitalizations over AU$11b and the median CEO total compensation was AU$5.7m. There aren't very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.

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So PG Harmer receives a similar amount to the median CEO pay, amongst the companies we looked at. This doesn't tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context.

You can see, below, how CEO compensation at Insurance Australia Group has changed over time.

ASX:IAG CEO Compensation, May 5th 2019
ASX:IAG CEO Compensation, May 5th 2019

Is Insurance Australia Group Limited Growing?

On average over the last three years, Insurance Australia Group Limited has grown earnings per share (EPS) by 13% each year (using a line of best fit). It saw its revenue drop -16% over the last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. While it would be good to see revenue growth, profits matter more in the end. It could be important to check this free visual depiction of what analysts expect for the future.

Has Insurance Australia Group Limited Been A Good Investment?

Boasting a total shareholder return of 58% over three years, Insurance Australia Group Limited has done well by shareholders. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

PG Harmer is paid around what is normal the leaders of larger companies.

The company is growing earnings per share and total shareholder returns have been pleasing. Indeed, many might consider the pay rather modest, given the solid company performance! Whatever your view on compensation, you might want to check if insiders are buying or selling Insurance Australia Group shares (free trial).

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

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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.