Fran Horowitz became the CEO of Abercrombie & Fitch Co. (NYSE:ANF) in 2017. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. 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. This method should give us information to assess how appropriately the company pays the CEO.
How Does Fran Horowitz’s Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Abercrombie & Fitch Co. has a market cap of US$1.1b, and reported total annual CEO compensation of US$8.5m for the year to February 2019. We think total compensation is more important but we note that the CEO salary is lower, at US$1.3m. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$400m to US$1.6b. The median total CEO compensation was US$2.6m.
It would therefore appear that Abercrombie & Fitch Co. pays Fran Horowitz more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn’t mean the remuneration is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
The graphic below shows how CEO compensation at Abercrombie & Fitch has changed from year to year.
Is Abercrombie & Fitch Co. Growing?
On average over the last three years, Abercrombie & Fitch Co. has grown earnings per share (EPS) by 87% each year (using a line of best fit). In the last year, its revenue changed by just 0.9%.
This demonstrates that the company has been improving recently. A good result. The lack of revenue growth isn’t ideal, but it is the bottom line that counts most in business. Shareholders might be interested in this free visualization of analyst forecasts.
Has Abercrombie & Fitch Co. Been A Good Investment?
I think that the total shareholder return of 70%, over three years, would leave most Abercrombie & Fitch Co. shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
We compared total CEO remuneration at Abercrombie & Fitch Co. with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of that group.
However, the earnings per share growth over three years is certainly impressive. On top of that, in the same period, returns to shareholders have been great. As a result of this good performance, the CEO remuneration may well be quite reasonable. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Abercrombie & Fitch.
If you want to buy a stock that is better than Abercrombie & Fitch, this free list of high return, low debt companies is a great place to look.
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