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Ralph Lauren Corporation (NYSE:RL) has not performed well recently and CEO Patrice Jean Louvet will probably need to up their game. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 29 July 2021. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. From our analysis, we think CEO compensation may need a review in light of the recent performance.
How Does Total Compensation For Patrice Jean Louvet Compare With Other Companies In The Industry?
According to our data, Ralph Lauren Corporation has a market capitalization of US$8.1b, and paid its CEO total annual compensation worth US$12m over the year to March 2021. That's mostly flat as compared to the prior year's compensation. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.1m.
In comparison with other companies in the industry with market capitalizations ranging from US$4.0b to US$12b, the reported median CEO total compensation was US$7.7m. This suggests that Patrice Jean Louvet is paid more than the median for the industry. What's more, Patrice Jean Louvet holds US$2.9m worth of shares in the company in their own name.
On an industry level, roughly 17% of total compensation represents salary and 83% is other remuneration. Ralph Lauren pays a modest slice of remuneration through salary, as compared to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
A Look at Ralph Lauren Corporation's Growth Numbers
Over the last three years, Ralph Lauren Corporation has shrunk its earnings per share by 44% per year. Its revenue is down 29% over the previous year.
Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Ralph Lauren Corporation Been A Good Investment?
Given the total shareholder loss of 15% over three years, many shareholders in Ralph Lauren Corporation are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 3 warning signs for Ralph Lauren that investors should be aware of in a dynamic business environment.
Important note: Ralph Lauren 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.
This article by Simply Wall St is general in nature. 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.
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