We Think Some Shareholders May Hesitate To Increase Louisiana-Pacific Corporation's (NYSE:LPX) CEO Compensation
Performance at Louisiana-Pacific Corporation (NYSE:LPX) has been reasonably good and CEO Brad Southern has done a decent job of steering the company in the right direction. This is something shareholders will keep in mind as they cast their votes on company resolutions such as executive remuneration in the upcoming AGM on 30 April 2021. However, some shareholders may still be hesitant of being overly generous with CEO compensation.
Check out our latest analysis for Louisiana-Pacific
Comparing Louisiana-Pacific Corporation's CEO Compensation With the industry
At the time of writing, our data shows that Louisiana-Pacific Corporation has a market capitalization of US$7.2b, and reported total annual CEO compensation of US$7.5m for the year to December 2020. We note that's an increase of 34% above last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.1m.
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$2.5m. This suggests that Brad Southern is paid more than the median for the industry. Moreover, Brad Southern also holds US$19m worth of Louisiana-Pacific stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Component | 2020 | 2019 | Proportion (2020) |
Salary | US$1.1m | US$961k | 14% |
Other | US$6.4m | US$4.6m | 86% |
Total Compensation | US$7.5m | US$5.6m | 100% |
On an industry level, around 18% of total compensation represents salary and 82% is other remuneration. In Louisiana-Pacific's case, non-salary compensation represents a greater slice of total remuneration, in comparison 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.
Louisiana-Pacific Corporation's Growth
Over the past three years, Louisiana-Pacific Corporation has seen its earnings per share (EPS) grow by 18% per year. In the last year, its revenue is up 21%.
Shareholders would be glad to know that the company has improved itself over the last few years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. 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 Louisiana-Pacific Corporation Been A Good Investment?
Most shareholders would probably be pleased with Louisiana-Pacific Corporation for providing a total return of 147% 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.
To Conclude...
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. However, any decision to raise CEO pay might be met with some objections from the shareholders given that the CEO is already paid higher than the industry average.
CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We identified 3 warning signs for Louisiana-Pacific (1 can't be ignored!) that you should be aware of before investing here.
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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