It's Unlikely That The CEO Of easyJet plc (LON:EZJ) Will See A Huge Pay Rise This Year
Key Insights
easyJet will host its Annual General Meeting on 8th of February
Salary of UK£770.0k is part of CEO Johan Lundgren's total remuneration
The overall pay is comparable to the industry average
easyJet's three-year loss to shareholders was 17% while its EPS grew by 107% over the past three years
Shareholders of easyJet plc (LON:EZJ) will have been dismayed by the negative share price return over the last three years. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 8th of February. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.
View our latest analysis for easyJet
How Does Total Compensation For Johan Lundgren Compare With Other Companies In The Industry?
According to our data, easyJet plc has a market capitalization of UK£4.2b, and paid its CEO total annual compensation worth UK£2.2m over the year to September 2023. That's a modest increase of 7.9% on the prior year. While we always look at total compensation first, our analysis shows that the salary component is less, at UK£770k.
On examining similar-sized companies in the the United Kingdom Airlines industry with market capitalizations between UK£3.1b and UK£9.4b, we discovered that the median CEO total compensation of that group was UK£2.2m. This suggests that easyJet remunerates its CEO largely in line with the industry average. Moreover, Johan Lundgren also holds UK£373k worth of easyJet stock directly under their own name.
Component | 2023 | 2022 | Proportion (2023) |
Salary | UK£770k | UK£740k | 35% |
Other | UK£1.4m | UK£1.3m | 65% |
Total Compensation | UK£2.2m | UK£2.0m | 100% |
On an industry level, around 53% of total compensation represents salary and 47% is other remuneration. In easyJet'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.
A Look at easyJet plc's Growth Numbers
Over the past three years, easyJet plc has seen its earnings per share (EPS) grow by 107% per year. It achieved revenue growth of 42% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast 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 easyJet plc Been A Good Investment?
Since shareholders would have lost about 17% over three years, some easyJet plc investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
To Conclude...
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. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.
Whatever your view on compensation, you might want to check if insiders are buying or selling easyJet shares (free trial).
Switching gears from easyJet, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
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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.
