Yahoo Finance The Cigna Group's (NYSE:CI) CEO Compensation Looks Acceptable To Us And Here's Why
Key Insights
Cigna Group will host its Annual General Meeting on 24th of April
Salary of US$1.50m is part of CEO David Cordani's total remuneration
The total compensation is similar to the average for the industry
Cigna Group's total shareholder return over the past three years was 44% while its EPS was down 7.7% over the past three years
The share price of The Cigna Group (NYSE:CI) has increased significantly over the past few years. However, the earnings growth has not kept up with the share price momentum, suggesting that some other factors may be driving the price direction. The upcoming AGM on 24th of April may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.
Check out our latest analysis for Cigna Group
Comparing The Cigna Group's CEO Compensation With The Industry
Our data indicates that The Cigna Group has a market capitalization of US$98b, and total annual CEO compensation was reported as US$21m for the year to December 2023. That is, the compensation was roughly the same as last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.5m.
In comparison with other companies in the American Healthcare industry with market capitalizations over US$8.0b, the reported median total CEO compensation was US$18m. From this we gather that David Cordani is paid around the median for CEOs in the industry. What's more, David Cordani holds US$212m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Component | 2023 | 2022 | Proportion (2023) |
Salary | US$1.5m | US$1.5m | 7% |
Other | US$20m | US$19m | 93% |
Total Compensation | US$21m | US$21m | 100% |
On an industry level, roughly 17% of total compensation represents salary and 83% is other remuneration. Cigna Group pays a modest slice of remuneration through salary, as compared to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
A Look at The Cigna Group's Growth Numbers
Over the last three years, The Cigna Group has shrunk its earnings per share by 7.7% per year. Its revenue is up 8.4% over the last year.
Few shareholders would be pleased to read that EPS have declined. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has The Cigna Group Been A Good Investment?
Boasting a total shareholder return of 44% over three years, The Cigna Group has done well by shareholders. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.
In Summary...
Despite the strong returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about the stock keeping up its current momentum. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We've identified 2 warning signs for Cigna Group that investors should be aware of in a dynamic business environment.
Important note: Cigna 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.
