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A Look At Codan's (ASX:CDA) CEO Remuneration

This article will reflect on the compensation paid to Donald McGurk who has served as CEO of Codan Limited (ASX:CDA) since 2010. This analysis will also assess whether Codan pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for Codan

How Does Total Compensation For Donald McGurk Compare With Other Companies In The Industry?

Our data indicates that Codan Limited has a market capitalization of AU$1.9b, and total annual CEO compensation was reported as AU$1.5m for the year to June 2020. We note that's an increase of 18% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at AU$599k.

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For comparison, other companies in the same industry with market capitalizations ranging between AU$1.4b and AU$4.3b had a median total CEO compensation of AU$2.7m. That is to say, Donald McGurk is paid under the industry median. Moreover, Donald McGurk also holds AU$7.6m worth of Codan stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component

2020

2019

Proportion (2020)

Salary

AU$599k

AU$548k

41%

Other

AU$854k

AU$681k

59%

Total Compensation

AU$1.5m

AU$1.2m

100%

On an industry level, around 57% of total compensation represents salary and 43% is other remuneration. Codan sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

ceo-compensation
ceo-compensation

A Look at Codan Limited's Growth Numbers

Over the past three years, Codan Limited has seen its earnings per share (EPS) grow by 13% per year. In the last year, its revenue is up 28%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Codan Limited Been A Good Investment?

Boasting a total shareholder return of 430% over three years, Codan Limited has done well by shareholders. 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.

To Conclude...

As we touched on above, Codan Limited is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Considering robust EPS growth, we believe Donald to be modestly paid. And given most shareholders are probably very happy with recent shareholder returns, they might even think Donald deserves a raise!

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 Codan that investors should think about before committing capital to this stock.

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.