The solid performance at Cincinnati Financial Corporation (NASDAQ:CINF) has been impressive and shareholders will probably be pleased to know that CEO Steve Johnston has delivered. At the upcoming AGM on 08 May 2021, they will get a chance to hear the board review the company results, discuss future strategy and cast their vote on any resolutions such as executive remuneration. Here we will show why we think CEO compensation is appropriate and discuss the case for a pay rise.

View our latest analysis for Cincinnati Financial

Comparing Cincinnati Financial Corporation's CEO Compensation With the industry

Our data indicates that Cincinnati Financial Corporation has a market capitalization of US$18b, and total annual CEO compensation was reported as US$3.8m for the year to December 2020. Notably, that's a decrease of 31% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.1m.

In comparison with other companies in the industry with market capitalizations over US$8.0b , the reported median total CEO compensation was US$11m. Accordingly, Cincinnati Financial pays its CEO under the industry median. Moreover, Steve Johnston also holds US$34m worth of Cincinnati Financial stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

On an industry level, around 18% of total compensation represents salary and 82% is other remuneration. According to our research, Cincinnati Financial has allocated a higher percentage of pay to salary in comparison to the wider industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Cincinnati Financial Corporation's Growth

Cincinnati Financial Corporation has seen its earnings per share (EPS) increase by 57% a year over the past three years. Its revenue is up 74% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. 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 Cincinnati Financial Corporation Been A Good Investment?

We think that the total shareholder return of 75%, over three years, would leave most Cincinnati Financial Corporation shareholders smiling. 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...

Given the company's decent performance, the CEO remuneration policy might not be shareholders' central point of focus in the AGM. Instead, investors might be more interested in discussions that would help manage their longer-term growth expectations such as company business strategies and future growth potential.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 2 warning signs for Cincinnati Financial (1 is concerning!) that you should be aware of before investing here.

Switching gears from Cincinnati Financial, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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