Is L Brands, Inc.'s (NYSE:LB) CEO Overpaid Relative To Its Peers?
Les Wexner has been the CEO of L Brands, Inc. (NYSE:LB) since 1963. First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.
View our latest analysis for L Brands
How Does Les Wexner's Compensation Compare With Similar Sized Companies?
Our data indicates that L Brands, Inc. is worth US$5.6b, and total annual CEO compensation was reported as US$4.6m for the year to February 2019. We think total compensation is more important but we note that the CEO salary is lower, at US$1.0m. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. We looked at a group of companies with market capitalizations from US$4.0b to US$12b, and the median CEO total compensation was US$6.4m.
So Les Wexner receives a similar amount to the median CEO pay, amongst the companies we looked at. Although this fact alone doesn't tell us a great deal, it becomes more relevant when considered against the business performance.
You can see, below, how CEO compensation at L Brands has changed over time.
Is L Brands, Inc. Growing?
On average over the last three years, L Brands, Inc. has shrunk earnings per share by 26% each year (measured with a line of best fit). Its revenue is down 1.1% over last year.
Few shareholders would be pleased to read that earnings per share are lower over three years. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Shareholders might be interested in this free visualization of analyst forecasts.
Has L Brands, Inc. Been A Good Investment?
With a three year total loss of 61%, L Brands, Inc. would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
In Summary...
Les Wexner is paid around what is normal the leaders of comparable size companies.
The company isn't growing EPS, and shareholder returns have been disappointing. Suffice it to say, we don't think the CEO is underpaid! Shareholders may want to check for free if L Brands insiders are buying or selling shares.
If you want to buy a stock that is better than L Brands, 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 editorial-team@simplywallst.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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