MetLife CEO Compensation and Performance: A Closer Look at Khalaf's 2024 Pay

MetLife, Inc. (MET) recently filed with the SEC that CEO Michel Khalaf’s total compensation for 2024 stood at $20.3 million, reflecting a slight dip from his 2023 pay of $20.5 million. This figure, while still among the highest in the insurance sector, comes amid a year of mixed financial results for the company. Let’s dissect whether this compensation aligns with shareholder interests, performance metrics, and broader industry trends.

MetLife’s 2024 Financials: A Story of Growth and Challenges

MetLife’s 2024 financial results were marked by a dramatic 228% surge in net income to $4.2 billion, driven by robust underwriting performance, market risk benefit gains, and strong sales in segments like Retirement and Income Solutions (RIS). Key highlights include:
- Adjusted EPS rose 12% to $8.15, outpacing 2023’s $7.25.
- ROE jumped to 16.9%, nearly tripling from 2023’s 5.4%.
- Asia and EMEA segments delivered standout growth, with adjusted earnings up 50% and 26%, respectively.

However, not all metrics were positive. The Group Benefits segment saw a 11% drop in adjusted earnings, while Asia’s sales fell 15% in constant currency due to Japan’s economic slowdown. Additionally, derivative losses of $713 million (after tax) highlighted risks tied to macroeconomic volatility.

Compensation Analysis: Equity Focus and Pay Ratio Concerns

Khalaf’s 2024 compensation of $20.3 million likely mirrors his 2023 structure, where 77% of pay came from equity incentives (stock awards and options). This emphasis on long-term equity aligns with MetLife’s strategy to tie executive pay to shareholder returns, which rose 19% over three years through 2024.

The CEO’s pay ratio of 252:1—meaning his compensation was 252 times that of the median MetLife employee’s $81,672—remains a contentious issue. While this ratio is in line with S&P 500 averages (which hover around 270:1), critics argue it underscores widening income disparities.

Key Questions for Investors

1. Is Khalaf’s pay justified?
   The CEO’s compensation has risen steadily since 2021, tracking closely with MetLife’s earnings growth. In 2024, despite the derivative headwinds, the company achieved its five-year Next Horizon goals and launched a New Frontier strategy focused on responsible growth. This suggests the board views Khalaf’s leadership as critical to sustaining momentum.

2. How does MetLife compare to peers?
   Khalaf’s pay is 36% above the median for large U.S. insurance CEOs, who averaged $15 million in 2023. This premium is justified by MetLife’s scale (market cap of $55 billion) and its global footprint, but it demands consistent outperformance.

3. What risks remain?
   While MetLife’s 2024 results were strong, reliance on volatile segments like RIS (which saw an 8% decline in adjusted earnings) and exposure to interest rate fluctuations (driving derivative losses) could test future profitability.

Conclusion: A Cautionary Optimism

MetLife’s 2024 financial turnaround, led by Khalaf’s strategic shifts, justifies his compensation package. The CEO’s equity-heavy pay structure aligns with long-term value creation, and the company’s ROE and EPS growth outpace many peers. However, investors must weigh this against lingering risks, including geographic sales volatility and derivative-driven losses.

The 252:1 pay ratio also warrants scrutiny, as it may invite regulatory or shareholder pushback. For now, MetLife’s stock (currently trading around $28, up 12% YTD) reflects optimism in its leadership and strategy. Yet, sustained success will depend on stabilizing underperforming segments and navigating macroeconomic uncertainties.

In short, Khalaf’s $20.3 million pay is a fair trade for shareholders—if MetLife continues to deliver on its Next Horizon ambitions.