On Friday, BMO Capital maintained its Market Perform rating on shares of Aon Corp (NYSE:AON) with a steady price target of $325.00. The firm's commentary followed the recent announcement regarding Aon's CFO Christa Davies' transition to a senior advisor role.
Aon Plc had previously announced on April 3, 2024, that its CFO, Christa Davies, would be retiring. In a new development, Aon filed a document on Thursday indicating that Davies would continue as a senior advisor to the company until May 2026. This extended advisory role is anticipated to result in Davies receiving approximately $38 million, which includes around $3 million in Restricted Stock Units (RSUs). These figures were not fully anticipated in earlier estimates.
The compensation package Davies is set to receive contrasts with the special Performance Share Units (PSUs) granted in July 2023. By transitioning to a senior advisory position, she will forfeit these special PSUs, which had the potential to be worth up to $55 million.
The financial implications of Davies' altered compensation and role were highlighted by BMO Capital as a significant factor. The firm's analysis suggests that the forfeiture of the special PSUs, in favor of the estimated compensation, will result in a lesser overall cost to Aon than previously assumed.
BMO Capital's reiteration of the Market Perform rating and the $325.00 price target reflects their current view of Aon's stock in light of these recent corporate developments. The target price remains unchanged following the update on the company's financial leadership and compensation arrangements.
In other recent news, Aon plc (NYSE:AON) has experienced significant developments in its executive leadership and business operations. The company has extended the international assignment letter agreement with Gregory C. Case until June 30, 2025, and announced that Christa Davies will continue her role as Executive Vice President and CFO until July 29, 2024, before transitioning to a senior advisory role. Edmund Reese has been appointed as the new executive vice president and CFO, effective July 29, 2024.
In addition, Aon's annual shareholder meeting resulted in the election of 12 director nominees and approval of all seven proposals, including the ratification of Ernst & Young LLP as the company's independent registered public accounting firm for the fiscal year ending December 31, 2024. Aon has also launched a $350 million war insurance program in collaboration with the U.S. International Development Finance Corporation to support Ukraine's health care and agricultural sectors.
Despite BofA Securities downgrading Aon's stock from Neutral to Underperform due to potential risks from its $13.4 billion acquisition of NFP and recent management shifts, the company reported strong first-quarter results for 2024, showcasing 5% organic revenue growth and 9% earnings per share growth.
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