What Can We Make Of Safety Insurance Group's (NASDAQ:SAFT) CEO Compensation?

This article will reflect on the compensation paid to George Murphy who has served as CEO of Safety Insurance Group, Inc. (NASDAQ:SAFT) since 2016. This analysis will also assess whether Safety Insurance Group pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for Safety Insurance Group

How Does Total Compensation For George Murphy Compare With Other Companies In The Industry?

At the time of writing, our data shows that Safety Insurance Group, Inc. has a market capitalization of US$1.1b, and reported total annual CEO compensation of US$3.3m for the year to December 2019. That's just a smallish increase of 7.3% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$774k.

On comparing similar companies from the same industry with market caps ranging from US$400m to US$1.6b, we found that the median CEO total compensation was US$3.3m. From this we gather that George Murphy is paid around the median for CEOs in the industry. Furthermore, George Murphy directly owns US$5.6m worth of shares in the company, implying that they are deeply invested in the company's success.

Talking in terms of the industry, salary represented approximately 16% of total compensation out of all the companies we analyzed, while other remuneration made up 84% of the pie. It's interesting to note that Safety Insurance Group pays out a greater portion of remuneration through salary, compared to the industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

Safety Insurance Group, Inc.'s Growth

Over the past three years, Safety Insurance Group, Inc. has seen its earnings per share (EPS) grow by 21% per year. It saw its revenue drop 2.6% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. While it would be good to see revenue growth, profits matter more in the end. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Safety Insurance Group, Inc. Been A Good Investment?

Since shareholders would have lost about 2.0% over three years, some Safety Insurance Group, Inc. investors would surely be feeling negative emotions. So shareholders would probably want the company to be lessto generous with CEO compensation.

To Conclude...

As we noted earlier, Safety Insurance Group pays its CEO in line with similar-sized companies belonging to the same industry. Meanwhile, shareholder returns paint a sorry picture for the company, finishing in the red over the last three years. However, EPS growth is positive over the same time frame. Considering positive EPS growth, we'd say compensation is fair, but shareholders may be wary of a bump in pay before the company logs positive returns.

Whatever your view on compensation, you might want to check if insiders are buying or selling Safety Insurance Group shares (free trial).

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.

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