Kurt Darrow became the CEO of La-Z-Boy Incorporated (NYSE:LZB) in 2003. First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Kurt Darrow's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that La-Z-Boy Incorporated has a market cap of US$1.5b, and reported total annual CEO compensation of US$6.6m for the year to April 2019. While we always look at total compensation first, we note that the salary component is less, at US$1.0m. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. We looked at a group of companies with market capitalizations from US$1.0b to US$3.2b, and the median CEO total compensation was US$3.9m.
Thus we can conclude that Kurt Darrow receives more in total compensation than the median of a group of companies in the same market, and of similar size to La-Z-Boy Incorporated. However, this doesn't necessarily mean the pay is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
You can see, below, how CEO compensation at La-Z-Boy has changed over time.
Is La-Z-Boy Incorporated Growing?
Over the last three years La-Z-Boy Incorporated has shrunk its earnings per share by an average of 1.1% per year (measured with a line of best fit). In the last year, its revenue is up 7.5%.
The lack of earnings per share growth in the last three years is unimpressive. And the modest revenue growth over 12 months isn't much comfort against the reduced earnings per share. 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 La-Z-Boy Incorporated Been A Good Investment?
La-Z-Boy Incorporated has generated a total shareholder return of 15% over three years, so most shareholders would be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.
We examined the amount La-Z-Boy Incorporated pays its CEO, and compared it to the amount paid by similar sized companies. Our data suggests that it pays above the median CEO pay within that group.
We think many shareholders would be underwhelmed with the business growth over the last three years. And while shareholder returns have been respectable, they have hardly been superb. So we think more research is needed, but we don't think the CEO underpaid. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling La-Z-Boy (free visualization of insider trades).
If you want to buy a stock that is better than La-Z-Boy, this free list of high return, low debt companies is a great place to look.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned.
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