Our View On Sally Beauty Holdings' (NYSE:SBH) CEO Pay
This article will reflect on the compensation paid to Chris Brickman who has served as CEO of Sally Beauty Holdings, Inc. (NYSE:SBH) since 2015. This analysis will also assess whether Sally Beauty Holdings pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Check out our latest analysis for Sally Beauty Holdings
Comparing Sally Beauty Holdings, Inc.'s CEO Compensation With the industry
Our data indicates that Sally Beauty Holdings, Inc. has a market capitalization of US$1.5b, and total annual CEO compensation was reported as US$5.6m for the year to September 2020. That's a slight decrease of 4.3% on the prior year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$957k.
On comparing similar companies from the same industry with market caps ranging from US$1.0b to US$3.2b, we found that the median CEO total compensation was US$5.2m. This suggests that Sally Beauty Holdings remunerates its CEO largely in line with the industry average. Moreover, Chris Brickman also holds US$6.0m worth of Sally Beauty Holdings 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$957k | US$1.0m | 17% |
Other | US$4.6m | US$4.8m | 83% |
Total Compensation | US$5.6m | US$5.9m | 100% |
On an industry level, roughly 20% of total compensation represents salary and 80% is other remuneration. In Sally Beauty Holdings' 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 Sally Beauty Holdings, Inc.'s Growth Numbers
Over the last three years, Sally Beauty Holdings, Inc. has shrunk its earnings per share by 14% per year. It saw its revenue drop 9.3% over the last year.
Few shareholders would be pleased to read that EPS have declined. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet 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 Sally Beauty Holdings, Inc. Been A Good Investment?
Since shareholders would have lost about 28% over three years, some Sally Beauty Holdings, Inc. investors would surely be feeling negative emotions. So shareholders would probably want the company to be lessto generous with CEO compensation.
In Summary...
As we touched on above, Sally Beauty Holdings, Inc. is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Meanwhile, EPS growth and shareholder returns have been in the red for the last three years. It's tough to call out the compensation as inappropriate, but shareholders might not favor a raise before company performance improves.
CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 3 warning signs for Sally Beauty Holdings you should be aware of, and 1 of them is a bit unpleasant.
Important note: Sally Beauty Holdings is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
