What Can We Learn About Nu Skin Enterprises' (NYSE:NUS) CEO Compensation?
This article will reflect on the compensation paid to Ritch Wood who has served as CEO of Nu Skin Enterprises, Inc. (NYSE:NUS) since 2017. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Nu Skin Enterprises.
See our latest analysis for Nu Skin Enterprises
How Does Total Compensation For Ritch Wood Compare With Other Companies In The Industry?
Our data indicates that Nu Skin Enterprises, Inc. has a market capitalization of US$2.7b, and total annual CEO compensation was reported as US$4.6m for the year to December 2019. Notably, that's a decrease of 25% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$992k.
For comparison, other companies in the same industry with market capitalizations ranging between US$2.0b and US$6.4b had a median total CEO compensation of US$834k. Accordingly, our analysis reveals that Nu Skin Enterprises, Inc. pays Ritch Wood north of the industry median. Moreover, Ritch Wood also holds US$10m worth of Nu Skin Enterprises stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Component | 2019 | 2018 | Proportion (2019) |
Salary | US$992k | US$942k | 22% |
Other | US$3.6m | US$5.1m | 78% |
Total Compensation | US$4.6m | US$6.1m | 100% |
On an industry level, around 72% of total compensation represents salary and 28% is other remuneration. It's interesting to note that Nu Skin Enterprises allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
Nu Skin Enterprises, Inc.'s Growth
Nu Skin Enterprises, Inc.'s earnings per share (EPS) grew 1.6% per year over the last three years. It saw its revenue drop 4.1% over the last year.
We generally like to see a little revenue growth, but it is good to see a modest EPS growth at least. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Nu Skin Enterprises, Inc. Been A Good Investment?
Given the total shareholder loss of 14% over three years, many shareholders in Nu Skin Enterprises, Inc. are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
To Conclude...
As previously discussed, Ritch is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. Over the last three years, shareholder returns have been downright disappointing for Nu Skin Enterprises, and although EPS growth is steady, it hasn't set the world on fire. And the situation doesn't look all that good when you see Ritch is remunerated higher than the industry average. All things considered, we believe shareholders would be disappointed to see Ritch's compensation grow without first seeing an improvement in the performance of the company.
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. We did our research and spotted 2 warning signs for Nu Skin Enterprises that investors should look into moving forward.
Important note: Nu Skin Enterprises 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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