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Why Lancaster Colony's (NASDAQ:LANC) CEO Pay Matters

This article will reflect on the compensation paid to Dave Ciesinski who has served as CEO of Lancaster Colony Corporation (NASDAQ:LANC) since 2017. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

View our latest analysis for Lancaster Colony

Comparing Lancaster Colony Corporation's CEO Compensation With the industry

Our data indicates that Lancaster Colony Corporation has a market capitalization of US$4.8b, and total annual CEO compensation was reported as US$3.9m for the year to June 2020. Notably, that's an increase of 11% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at US$800k.

On comparing similar companies from the same industry with market caps ranging from US$4.0b to US$12b, we found that the median CEO total compensation was US$7.1m. That is to say, Dave Ciesinski is paid under the industry median. What's more, Dave Ciesinski holds US$7.5m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component

2020

2019

Proportion (2020)

Salary

US$800k

US$775k

20%

Other

US$3.1m

US$2.8m

80%

Total Compensation

US$3.9m

US$3.6m

100%

Talking in terms of the industry, salary represented approximately 30% of total compensation out of all the companies we analyzed, while other remuneration made up 70% of the pie. It's interesting to note that Lancaster Colony allocates a smaller portion of compensation to salary 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.

ceo-compensation
ceo-compensation

A Look at Lancaster Colony Corporation's Growth Numbers

Over the past three years, Lancaster Colony Corporation has seen its earnings per share (EPS) grow by 4.3% per year. In the last year, its revenue is up 2.5%.

We would argue that the improvement in revenue is good, but isn't particularly impressive, but the modest improvement in EPS is good. Considering these factors we'd say performance has been pretty decent, though not amazing. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Lancaster Colony Corporation Been A Good Investment?

Most shareholders would probably be pleased with Lancaster Colony Corporation for providing a total return of 54% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

As previously discussed, Dave is compensated less than what is normal for CEOs of companies of similar size, and which belong to the same industry. In contrast, shareholder returns have been excellent over the past three years, and that’s certainly a promising trend to keep an eye on. So, considering these tasty returns, CEO compensation seems quite appropriate.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 1 warning sign for Lancaster Colony that investors should be aware of in a dynamic business environment.

Important note: Lancaster Colony 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.

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