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In the final instalment of our executive compensation series – following on from our introduction of the overall rankings for 2021 and a comparison of pay at North American and European firms – we put CEOs’ annual pay packages in context: comparing US leaders against median employee wages, and CEOs on both sides of the Atlantic against the size of their companies.
Since 2018, firms listed on US public markets – with some exceptions for smaller reporting companies – have been required to disclose how much their chief executives have been compensated in each financial year as a multiple of their median employee’s annual pay.
Analysis of 2021 filings collated by S&P shows that Chubb reported the highest such ratio among US P&C insurers and brokers. CEO Evan Greenberg’s total compensation package of $23.2mn was worth 322 times that of the company’s median employee, who earned just over $70,000.
Marsh McLennan CEO Dan Glaser – who ranked sixth to Greenberg’s third in this publication’s latest annual pay rankings, which were published in full on Monday – was second overall by this measure, with his annual pay equalling 321x that of his median employee.
Allstate, AIG and WTW all paid their CEOs more than 300 times the annual salary of their own median employees, while Aon, Lemonade, Progressive and AJ Gallagher all reported ratios of more than 200x.
Metromile – whose CEO Dan Preston topped our 2021 rankings with an annual compensation package of more than $40mn – did not report its pay ratio last year. The firm listed as an "emerging growth company", allowing it to take advantage of reduced disclosure requirements relating to executive compensation.
The highest pay ratios reported by US insurers and brokers for 2021 were roughly in line with the 75th percentile of current constituents of the S&P 500 index (321x) and comfortably above the median of companies in that cohort (194x).
Across the 46 companies in the industry for which these figures were available last year, the median ratio was 78x.
North American firms pay more relative to size
While comparable data is not widely available for firms listed in the UK and Continental Europe, comparison of CEO pay packages to company size – using opening equity balances as a proxy – shows that higher salaries in North America are not simply a function of executives running larger operations than their rivals across the Atlantic.
In the second piece of our series on executive pay – published on Wednesday – it was revealed that the median CEO in the US and Canada earned 1.6x more than their counterparts in Europe in 2021.
Across the companies analysed in the US and Canada as part of this series – excluding InsurTechs and firms which listed during 2021 – the median CEO was awarded annual compensation equal to 0.18% of their company’s opening equity balance last year.
By this metric, HCI’s Paresh Patel was comfortably paid the most in relative terms. His pay package of $7.7mn was equivalent to 3.85% of the Floridian’s $201mn of total equity at 1 January 2021.
This was more than 300 basis points higher than the next chief executives on the list: FedNat’s Michael Braun, SiriusPoint's Sid Sankaran and Universal's Stephen Donaghy, whose respective compensation figures were equal to around 0.8% of their companies’ opening equity.
Greg Case, whose 2021 pay was equal to 0.56% of Aon’s equity balance at 1 January, was the only CEO to make both the overall top 10 and the top 10 in relative terms.
Hiscox, Conduit, Beazley and Lancashire all awarded their CEOs compensation packages in the range of 0.2%-0.3% of opening equity in 2021, while no Continental European carrier paid their top executive more than 0.03%.
Even the top-ranked UK CEO by this metric – Lancashire’s Alex Maloney – would not have cracked the North American top 10.
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