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The share price of ManpowerGroup Inc. (NYSE:MAN) has increased significantly over the past few years. However, the earnings growth has not kept up with the share price momentum, suggesting that some other factors may be driving the price direction. Some of these issues will occupy shareholders' minds as the AGM rolls around on 07 May 2021. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.
Comparing ManpowerGroup Inc.'s CEO Compensation With the industry
According to our data, ManpowerGroup Inc. has a market capitalization of US$6.6b, and paid its CEO total annual compensation worth US$12m over the year to December 2020. That's a slight decrease of 5.1% on the prior year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.1m.
On examining similar-sized companies in the industry with market capitalizations between US$4.0b and US$12b, we discovered that the median CEO total compensation of that group was US$8.6m. This suggests that Jonas Prising is paid more than the median for the industry. What's more, Jonas Prising holds US$32m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Speaking on an industry level, nearly 20% of total compensation represents salary, while the remainder of 80% is other remuneration. In ManpowerGroup's case, non-salary compensation represents a greater slice of total remuneration, 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.
ManpowerGroup Inc.'s Growth
Over the last three years, ManpowerGroup Inc. has shrunk its earnings per share by 44% per year. Its revenue is down 10% over the previous year.
Few shareholders would be pleased to read that EPS have declined. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has ManpowerGroup Inc. Been A Good Investment?
Most shareholders would probably be pleased with ManpowerGroup Inc. for providing a total return of 35% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
Despite the strong returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about the stock keeping up its current momentum. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.
CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 6 warning signs for ManpowerGroup that investors should look into moving forward.
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.
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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