Key Insights

• American International Group to hold its Annual General Meeting on 14th of May
• Salary of US$1.50m is part of CEO Peter Zaffino's total remuneration
• Total compensation is 88% above industry average
• American International Group's total shareholder return over the past three years was 50% while its EPS was down 28% over the past three years

American International Group, Inc. (NYSE:AIG) has exhibited strong share price growth in the past few years. However, its earnings growth has not kept up, suggesting that there may be something amiss. The upcoming AGM on 14th of May may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.

Comparing American International Group, Inc.'s CEO Compensation With The Industry

Our data indicates that American International Group, Inc. has a market capitalization of US$48b, and total annual CEO compensation was reported as US$25m for the year to December 2024. This means that the compensation hasn't changed much from last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.5m.

For comparison, other companies in the American Insurance industry with market capitalizations above US$8.0b, reported a median total CEO compensation of US$13m. This suggests that Peter Zaffino is paid more than the median for the industry. What's more, Peter Zaffino holds US$53m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Talking in terms of the industry, salary represented approximately 14% of total compensation out of all the companies we analyzed, while other remuneration made up 86% of the pie. American International Group pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

American International Group, Inc.'s Growth

Over the last three years, American International Group, Inc. has shrunk its earnings per share by 28% per year. It saw its revenue drop 3.1% over the last year.

Few shareholders would be pleased to read that EPS have declined. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has American International Group, Inc. Been A Good Investment?

Boasting a total shareholder return of 50% over three years, American International Group, Inc. has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

While the return to shareholders does look promising, it's hard to ignore the lack of earnings growth and this makes us question whether these strong returns will continue. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.

So you may want to check if insiders are buying American International Group shares with their own money (free access).

Arguably, business quality is much more important than CEO compensation levels.

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.