Here's Why We Think Lancaster Colony Corporation's (NASDAQ:LANC) CEO Compensation Looks Fair
Performance at Lancaster Colony Corporation (NASDAQ:LANC) has been rather uninspiring recently and shareholders may be wondering how CEO Dave Ciesinski plans to fix this. At the next AGM coming up on 09 November 2022, they can influence managerial decision making through voting on resolutions, including executive remuneration. Voting on executive pay could be a powerful way to influence management, as studies have shown that the right compensation incentives impact company performance. We think CEO compensation looks appropriate given the data we have put together.
View our latest analysis for Lancaster Colony
How Does Total Compensation For Dave Ciesinski Compare With Other Companies In The Industry?
Our data indicates that Lancaster Colony Corporation has a market capitalization of US$4.9b, and total annual CEO compensation was reported as US$3.7m for the year to June 2022. That's a notable decrease of 14% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$845k.
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$6.9m. In other words, Lancaster Colony pays its CEO lower than the industry median. Furthermore, Dave Ciesinski directly owns US$9.9m worth of shares in the company, implying that they are deeply invested in the company's success.
Component | 2022 | 2021 | Proportion (2022) |
Salary | US$845k | US$820k | 23% |
Other | US$2.9m | US$3.5m | 77% |
Total Compensation | US$3.7m | US$4.3m | 100% |
Talking in terms of the industry, salary represented approximately 23% of total compensation out of all the companies we analyzed, while other remuneration made up 77% of the pie. Our data reveals that Lancaster Colony allocates salary more or less in line with the wider market. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
A Look at Lancaster Colony Corporation's Growth Numbers
Over the last three years, Lancaster Colony Corporation has shrunk its earnings per share by 16% per year. Its revenue is up 14% over the last year.
The decline in EPS is a bit concerning. While the revenue growth is good to see, it is outweighed by the fact that EPS 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. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Lancaster Colony Corporation Been A Good Investment?
Lancaster Colony Corporation has generated a total shareholder return of 21% over three years, so most shareholders would be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
To Conclude...
Despite the positive returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about the stock keeping up its current momentum. These are are some concerns that shareholders may want to address the board when they revisit their investment thesis.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 3 warning signs for Lancaster Colony you should be aware of, and 1 of them can't be ignored.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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