Shareholders May Be More Conservative With Avaya Holdings Corp.'s (NYSE:AVYA) CEO Compensation For Now
The underwhelming share price performance of Avaya Holdings Corp. (NYSE:AVYA) in the past three years would have disappointed many shareholders. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 02 March 2022. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.
Check out our latest analysis for Avaya Holdings
How Does Total Compensation For Jim Chirico Compare With Other Companies In The Industry?
According to our data, Avaya Holdings Corp. has a market capitalization of US$1.1b, and paid its CEO total annual compensation worth US$14m over the year to September 2021. That's a notable increase of 24% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.3m.
On comparing similar companies from the same industry with market caps ranging from US$400m to US$1.6b, we found that the median CEO total compensation was US$2.5m. Hence, we can conclude that Jim Chirico is remunerated higher than the industry median. What's more, Jim Chirico holds US$14m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Component | 2021 | 2020 | Proportion (2021) |
Salary | US$1.3m | US$1.3m | 9% |
Other | US$13m | US$9.9m | 91% |
Total Compensation | US$14m | US$11m | 100% |
Speaking on an industry level, nearly 16% of total compensation represents salary, while the remainder of 84% is other remuneration. Avaya Holdings pays a modest slice of remuneration through salary, as compared to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
A Look at Avaya Holdings Corp.'s Growth Numbers
Over the past three years, Avaya Holdings Corp. has seen its earnings per share (EPS) grow by 8.9% per year. It achieved revenue growth of 1.4% over the last year.
We're not particularly impressed by the revenue growth, but we're happy with the modest EPS growth. So there are some positives here, but not enough to earn high praise. 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 Avaya Holdings Corp. Been A Good Investment?
Given the total shareholder loss of 17% over three years, many shareholders in Avaya Holdings Corp. are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
In Summary...
Shareholders have not seen their shares grow in value, rather they have seen their shares decline. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would be keen to know what's holding the stock back when earnings have grown. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.
We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 3 warning signs for Avaya Holdings (of which 1 is a bit unpleasant!) that you should know about in order to have a holistic understanding of the stock.
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.
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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.
