Mary Dillon became the CEO of Ulta Beauty, Inc. (NASDAQ:ULTA) in 2013. First, this article will compare CEO compensation with compensation at other large companies. After that, we will consider the growth in the business. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Mary Dillon’s Compensation Compare With Similar Sized Companies?
Our data indicates that Ulta Beauty, Inc. is worth US$15b, and total annual CEO compensation was reported as US$14m for the year to February 2019. While we always look at total compensation first, we note that the salary component is less, at US$1.2m. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. When we examined a group of companies with market caps over US$8.0b, we found that their median CEO total compensation was US$11m. (We took a wide range because the CEOs of massive companies tend to be paid similar amounts – even though some are quite a bit bigger than others).
As you can see, Mary Dillon is paid more than the median CEO pay at large companies, in the same market. However, this does not necessarily mean Ulta Beauty, Inc. is paying too much. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
The graphic below shows how CEO compensation at Ulta Beauty has changed from year to year.
Is Ulta Beauty, Inc. Growing?
Ulta Beauty, Inc. has increased its earnings per share (EPS) by an average of 23% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 11%.
This demonstrates that the company has been improving recently. A good result. It’s a real positive to see this sort of growth in a single year. That suggests a healthy and growing business. It could be important to check this free visual depiction of what analysts expect for the future.
Has Ulta Beauty, Inc. Been A Good Investment?
Given the total loss of 3.3% over three years, many shareholders in Ulta Beauty, Inc. are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
We examined the amount Ulta Beauty, Inc. pays its CEO, and compared it to the amount paid by other large companies. Our data suggests that it pays above the median CEO pay within that group.
Importantly, though, the company has impressed with its earnings per share growth, over three years. On the other hand returns to investors over the same period have probably disappointed many. While EPS is positive, we’d say shareholders would want better returns before the CEO is paid much more. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Ulta Beauty (free visualization of insider trades).
Important note: Ulta Beauty may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned.
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