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James Tisch has been the CEO of Loews Corporation (NYSE:L) since 1998, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Loews.
Comparing Loews Corporation's CEO Compensation With the industry
According to our data, Loews Corporation has a market capitalization of US$9.3b, and paid its CEO total annual compensation worth US$9.3m over the year to December 2019. We note that's an increase of 63% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$975k.
On comparing similar companies from the same industry with market caps ranging from US$4.0b to US$12b, we found that the median CEO total compensation was US$9.5m. This suggests that Loews remunerates its CEO largely in line with the industry average. Furthermore, James Tisch directly owns US$566m worth of shares in the company, implying that they are deeply invested in the company's success.
Speaking on an industry level, nearly 17% of total compensation represents salary, while the remainder of 83% is other remuneration. Loews sets aside a smaller share of compensation for salary, in comparison to the overall 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 Loews Corporation's Growth Numbers
Loews Corporation has reduced its earnings per share by 55% a year over the last three years. It saw its revenue drop 9.4% over the last year.
The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Loews Corporation Been A Good Investment?
Given the total shareholder loss of 29% over three years, many shareholders in Loews Corporation are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
As we noted earlier, Loews pays its CEO in line with similar-sized companies belonging to the same industry. In the meantime, the company has reported declining EPS growth and shareholder returns over the last three years. It's tough to call out the compensation as inappropriate, but shareholders might not favor a raise before company performance improves.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 2 warning signs for Loews that investors should think about before committing capital to this stock.
Important note: Loews 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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