This article will reflect on the compensation paid to Howard Lorber who has served as CEO of Vector Group Ltd. (NYSE:VGR) since 2006. This analysis will also assess whether Vector Group pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Comparing Vector Group Ltd.'s CEO Compensation With the industry
According to our data, Vector Group Ltd. has a market capitalization of US$1.8b, and paid its CEO total annual compensation worth US$12m over the year to December 2019. Notably, that's an increase of 38% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$3.3m.
In comparison with other companies in the industry with market capitalizations ranging from US$1.0b to US$3.2b, the reported median CEO total compensation was US$3.4m. Accordingly, our analysis reveals that Vector Group Ltd. pays Howard Lorber north of the industry median. Moreover, Howard Lorber also holds US$45m worth of Vector Group 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 27% of total compensation out of all the companies we analyzed, while other remuneration made up 73% of the pie. Although there is a difference in how total compensation is set, Vector Group more or less reflects the market in terms of setting the salary. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
A Look at Vector Group Ltd.'s Growth Numbers
Vector Group Ltd. has seen its earnings per share (EPS) increase by 17% a year over the past three years. It saw its revenue drop 1.6% over the last year.
This demonstrates that the company has been improving recently and is good news for the shareholders. It's always a tough situation when revenues are not growing, but ultimately profits are more important. 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 Vector Group Ltd. Been A Good Investment?
Since shareholders would have lost about 23% over three years, some Vector Group Ltd. investors would surely be feeling negative emotions. So shareholders would probably want the company to be lessto generous with CEO compensation.
As previously discussed, Howard is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. However, we must not forget that the EPS growth has been very strong, but we cannot say the same about the uninspiring shareholder returns (over the last three years). Although we don't think the CEO pay is too high, considering negative investor returns, it is more generous than modest.
We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 6 warning signs for Vector Group (1 doesn't sit too well with us!) that you should be aware of before investing here.
Switching gears from Vector Group, 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.
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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