Shareholders May Be More Conservative With The Estée Lauder Companies Inc.'s (NYSE:EL) CEO Compensation For Now
Performance at The Estée Lauder Companies Inc. (NYSE:EL) has been reasonably good and CEO Fabrizio Freda has done a decent job of steering the company in the right direction. As shareholders go into the upcoming AGM on 18 November 2022, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. However, some shareholders may still be hesitant of being overly generous with CEO compensation.
View our latest analysis for Estée Lauder Companies
How Does Total Compensation For Fabrizio Freda Compare With Other Companies In The Industry?
At the time of writing, our data shows that The Estée Lauder Companies Inc. has a market capitalization of US$81b, and reported total annual CEO compensation of US$25m for the year to June 2022. We note that's a decrease of 61% compared to last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$2.1m.
For comparison, other companies in the industry with market capitalizations above US$8.0b, reported a median total CEO compensation of US$3.4m. Hence, we can conclude that Fabrizio Freda is remunerated higher than the industry median. What's more, Fabrizio Freda holds US$31m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Component | 2022 | 2021 | Proportion (2022) |
Salary | US$2.1m | US$1.7m | 8% |
Other | US$23m | US$64m | 92% |
Total Compensation | US$25m | US$66m | 100% |
On an industry level, roughly 35% of total compensation represents salary and 65% is other remuneration. Estée Lauder Companies pays a modest slice of remuneration through salary, as compared 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.
The Estée Lauder Companies Inc.'s Growth
Over the past three years, The Estée Lauder Companies Inc. has seen its earnings per share (EPS) grow by 5.7% per year. In the last year, its revenue is up 1.3%.
We're not particularly impressed by the revenue growth, but it is good to see modest EPS growth. Considering these factors we'd say performance has been pretty decent, though not amazing. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has The Estée Lauder Companies Inc. Been A Good Investment?
The Estée Lauder Companies Inc. has served shareholders reasonably well, with a total return of 22% over three years. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.
In Summary...
Seeing that the company has put up a decent performance, only a few shareholders, if any at all, might have questions about the CEO pay in the upcoming AGM. Still, not all shareholders might be in favor of a pay raise to the CEO, seeing that they are already being paid higher than the industry.
CEO compensation can have a massive impact on performance, but it's just one element. We've identified 2 warning signs for Estée Lauder Companies that investors should be aware of in a dynamic business environment.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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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.
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