Yahoo Finance We Take A Look At Why Arch Capital Group Ltd.'s (NASDAQ:ACGL) CEO Has Earned Their Pay Packet
Key Insights
Arch Capital Group's Annual General Meeting to take place on 9th of May
Total pay for CEO Marc Grandisson includes US$1.23m salary
The total compensation is similar to the average for the industry
Arch Capital Group's total shareholder return over the past three years was 139% while its EPS grew by 46% over the past three years
It would be hard to discount the role that CEO Marc Grandisson has played in delivering the impressive results at Arch Capital Group Ltd. (NASDAQ:ACGL) recently. The pleasing results would be something shareholders would keep in mind at the upcoming AGM on 9th of May. This would also be a chance for them to hear the board review the financial results, discuss future company strategy and vote on any resolutions such as executive remuneration. Here is our take on why we think CEO compensation is not extravagant.
View our latest analysis for Arch Capital Group
How Does Total Compensation For Marc Grandisson Compare With Other Companies In The Industry?
Our data indicates that Arch Capital Group Ltd. has a market capitalization of US$36b, and total annual CEO compensation was reported as US$13m for the year to December 2023. We note that's an increase of 8.3% above last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.2m.
For comparison, other companies in the American Insurance industry with market capitalizations above US$8.0b, reported a median total CEO compensation of US$15m. This suggests that Arch Capital Group remunerates its CEO largely in line with the industry average. Moreover, Marc Grandisson also holds US$241m worth of Arch Capital Group stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Component | 2023 | 2022 | Proportion (2023) |
Salary | US$1.2m | US$1.2m | 9% |
Other | US$12m | US$11m | 91% |
Total Compensation | US$13m | US$12m | 100% |
On an industry level, roughly 14% of total compensation represents salary and 86% is other remuneration. It's interesting to note that Arch Capital Group allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
Arch Capital Group Ltd.'s Growth
Arch Capital Group Ltd. has seen its earnings per share (EPS) increase by 46% a year over the past three years. Its revenue is up 33% over the last year.
Shareholders would be glad to know that the company has improved itself over the last few years. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Arch Capital Group Ltd. Been A Good Investment?
Boasting a total shareholder return of 139% over three years, Arch Capital Group Ltd. 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.
In Summary...
Seeing that the company has put in a relatively good performance, the CEO remuneration policy may not be the focus at the AGM. However, investors will get the chance to engage on key strategic initiatives and future growth opportunities for the company and set their longer-term expectations.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 2 warning signs for Arch Capital Group (of which 1 doesn't sit too well with us!) that you should know about in order to have a holistic understanding of the stock.
Important note: Arch Capital Group 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.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
