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Jay Schottenstein has been the CEO of American Eagle Outfitters, Inc. (NYSE:AEO) since 2014, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
How Does Total Compensation For Jay Schottenstein Compare With Other Companies In The Industry?
At the time of writing, our data shows that American Eagle Outfitters, Inc. has a market capitalization of US$1.8b, and reported total annual CEO compensation of US$8.1m for the year to February 2020. We note that's a decrease of 21% compared to last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.5m.
In comparison with other companies in the industry with market capitalizations ranging from US$1.0b to US$3.2b, the reported median CEO total compensation was US$7.5m. This suggests that American Eagle Outfitters remunerates its CEO largely in line with the industry average. Furthermore, Jay Schottenstein directly owns US$112m worth of shares in the company, implying that they are deeply invested in the company's success.
On an industry level, around 20% of total compensation represents salary and 80% is other remuneration. Our data reveals that American Eagle Outfitters allocates salary more or less in line with the wider market. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
American Eagle Outfitters, Inc.'s Growth
Over the last three years, American Eagle Outfitters, Inc. has shrunk its earnings per share by 9.4% per year. Its revenue is down 3.0% over the previous year.
Few shareholders would be pleased to read that earnings have declined. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has American Eagle Outfitters, Inc. Been A Good Investment?
Since shareholders would have lost about 0.9% over three years, some American Eagle Outfitters, Inc. investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
As we noted earlier, American Eagle Outfitters pays its CEO in line with similar-sized companies belonging to the same industry. Meanwhile, earnings growth and shareholder returns have been in the red for the last three years. Considering overall performance, shareholders will likely hold off support for a raise until results improve.
CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 3 warning signs for American Eagle Outfitters (1 can't be ignored!) that you should be aware of before investing here.
Important note: American Eagle Outfitters 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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