In 2007, Randy Ramlo was appointed CEO of United Fire Group, Inc. (NASDAQ:UFCS). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we’ll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Randy Ramlo’s Compensation Compare With Similar Sized Companies?
According to our data, United Fire Group, Inc. has a market capitalization of US$681m, and paid its CEO total annual compensation worth US$2.3m over the year to December 2019. That’s less than last year. We think total compensation is more important but we note that the CEO salary is lower, at US$800k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We examined companies with market caps from US$400m to US$1.6b, and discovered that the median CEO total compensation of that group was US$3.3m.
Next, let’s break down remuneration compositions to understand how the industry and company compare with each other. On an industry level, roughly 19% of total compensation represents salary and 81% is other remuneration. It’s interesting to note that United Fire Group pays out a greater portion of remuneration through salary, in comparison to the wider industry.
Most shareholders would consider it a positive that Randy Ramlo takes less total compensation than the CEOs of most similar size companies, leaving more for shareholders. Though positive, it’s important we delve into the performance of the actual business. The graphic below shows how CEO compensation at United Fire Group has changed from year to year.
Is United Fire Group, Inc. Growing?
On average over the last three years, United Fire Group, Inc. has shrunk earnings per share by 31% each year (measured with a line of best fit). In the last year, its revenue is up 12%.
Unfortunately, earnings per share have trended lower over the last three years. And while it’s good to see some good revenue growth recently, the growth isn’t really fast enough for me to put aside my concerns around earnings. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. You might want to check this free visual report on analyst forecasts for future earnings.
Has United Fire Group, Inc. Been A Good Investment?
Given the total loss of 28% over three years, many shareholders in United Fire Group, Inc. are probably rather dissatisfied, to say the least. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.
It appears that United Fire Group, Inc. remunerates its CEO below most similar sized companies.
Randy Ramlo is paid less than CEOs of similar size companies, but the company isn’t growing and total shareholder returns have been disappointing. Considering all these factors, we’d stop short of saying the CEO pay is too high, but we don’t think shareholders would want to see a pay rise before business performance improves. Shifting gears from CEO pay for a second, we’ve spotted 2 warning signs for United Fire Group you should be aware of, and 1 of them makes us a bit uncomfortable.
If you want to buy a stock that is better than United Fire Group, this free list of high return, low debt companies is a great place to look.
If you spot an error that warrants correction, please contact the editor at [email protected] 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. Simply Wall St has no position in the stocks mentioned.
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