Yahoo Finance Is Assured Guaranty Ltd.’s (NYSE:AGO) CEO Salary Justified?
Dominic Frederico has been the CEO of Assured Guaranty Ltd. (NYSE:AGO) since 2003. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.
Check out our latest analysis for Assured Guaranty
How Does Dominic Frederico’s Compensation Compare With Similar Sized Companies?
Our data indicates that Assured Guaranty Ltd. is worth US$3.9b, and total annual CEO compensation is US$14m. (This number is for the twelve months until 2017). We think total compensation is more important but we note that the CEO salary is lower, at US$1.3m. When we examined a selection of companies with market caps ranging from US$2.0b to US$6.4b, we found the median CEO compensation was US$5.2m.
It would therefore appear that Assured Guaranty Ltd. pays Dominic Frederico more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn’t mean the remuneration is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
You can see, below, how CEO compensation at Assured Guaranty has changed over time.
Is Assured Guaranty Ltd. Growing?
Over the last three years Assured Guaranty Ltd. has shrunk its earnings per share by an average of 12% per year. In the last year, its revenue is down -40%.
Unfortunately, earnings per share have trended lower over the last three years. This is compounded by the fact revenue is actually down on last year. It’s hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration.
Shareholders might be interested in this free visualization of analyst forecasts. .
Has Assured Guaranty Ltd. Been A Good Investment?
Most shareholders would probably be pleased with Assured Guaranty Ltd. for providing a total return of 41% over three years. So they may not be at all concerned if the CEO is paid more than is normal for companies around the same size.
In Summary…
We compared total CEO remuneration at Assured Guaranty Ltd. with the amount paid at companies with a similar market capitalization. We found that it pays well over the median amount paid in the benchmark group.
We think many shareholders would be underwhelmed with the business growth over the last three years.
On the other hand, returns have been good, so the company is doing something right. Given this situation we doubt shareholders are particularly concerned about the CEO compensation. Whatever your view on compensation, you might want to check if insiders are buying or selling Assured Guaranty shares (free trial).
Or you could feast your eyes on this interactive graph depicting past earnings, cash flow and revenue.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
