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Is Guess’, Inc.’s (NYSE:GES) CEO Pay Justified?

In 2015 Amigo Herrero was appointed CEO of Guess’, Inc. (NYSE:GES). First, this article will compare CEO compensation with compensation at similar sized companies. Then we’ll look at a snap shot of the business growth. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.

View our latest analysis for Guess’

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How Does Amigo Herrero’s Compensation Compare With Similar Sized Companies?

According to our data, Guess’, Inc. has a market capitalization of US$1.6b, and pays its CEO total annual compensation worth US$8.6m. (This number is for the twelve months until 2018). While we always look at total compensation first, we note that the salary component is less, at US$1.2m. We looked at a group of companies with market capitalizations from US$1.0b to US$3.2b, and the median CEO compensation was US$3.5m.

Thus we can conclude that Amigo Herrero receives more in total compensation than the median of a group of companies in the same market, and of similar size to Guess’, Inc.. However, this doesn’t necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.

The graphic below shows how CEO compensation at Guess’ has changed from year to year.

NYSE:GES CEO Compensation January 30th 19
NYSE:GES CEO Compensation January 30th 19

Is Guess’, Inc. Growing?

Over the last three years Guess’, Inc. has shrunk its earnings per share by an average of 103% per year. It achieved revenue growth of 14% over the last year.

Unfortunately, earnings per share have trended lower over the last three years. While the revenue growth is good to see, it is outweighed by the fact that earnings per share are down, over three years. It’s hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration.

You might want to check this free visual report on analyst forecasts for future earnings.

Has Guess’, Inc. Been A Good Investment?

With a total shareholder return of 24% over three years, Guess’, Inc. shareholders would, in general, be reasonably content. But they probably wouldn’t be so happy as to think the CEO should be paid more than is normal, for companies around this size.

In Summary…

We compared total CEO remuneration at Guess’, Inc. with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of that group.

We think many shareholders would be underwhelmed with the business growth over the last three years.

And shareholder returns are decent but not great. So you may want to delve deeper, because we don’t think the CEO pay is too low. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Guess’ (free visualization of insider trades).

Or you might prefer this data-rich interactive visualization of historic revenue and earnings.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.

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