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The share price of Skechers U.S.A., Inc. (NYSE:SKX) 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 26 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. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.
How Does Total Compensation For Robert Greenberg Compare With Other Companies In The Industry?
At the time of writing, our data shows that Skechers U.S.A., Inc. has a market capitalization of US$7.2b, and reported total annual CEO compensation of US$20m for the year to December 2020. Notably, that's an increase of 48% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at US$5.8m.
In comparison with other companies in the industry with market capitalizations ranging from US$4.0b to US$12b, the reported median CEO total compensation was US$8.1m. This suggests that Robert Greenberg is paid more than the median for the industry. Moreover, Robert Greenberg also holds US$224m worth of Skechers U.S.A stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Talking in terms of the industry, salary represented approximately 23% of total compensation out of all the companies we analyzed, while other remuneration made up 77% of the pie. Skechers U.S.A pays out 29% of remuneration in the form of a salary, significantly higher than the industry average. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
Skechers U.S.A., Inc.'s Growth
Skechers U.S.A., Inc. has reduced its earnings per share by 9.7% a year over the last three years. In the last year, its revenue is down 7.8%.
The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 Skechers U.S.A., Inc. Been A Good Investment?
We think that the total shareholder return of 54%, over three years, would leave most Skechers U.S.A., Inc. shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.
While the return to shareholders does look promising, it's hard to ignore the lack of earnings growth and this makes us question whether these strong returns will continue. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.
CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 3 warning signs for Skechers U.S.A that you should be aware of before investing.
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.
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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