We Think Lendlease Group's (ASX:LLC) CEO Compensation Package Needs To Be Put Under A Microscope

Key Insights

• Lendlease Group to hold its Annual General Meeting on 14th of November
• Salary of AU$1.78m is part of CEO Tony Lombardo's total remuneration
• Total compensation is 155% above industry average
• Over the past three years, Lendlease Group's EPS fell by 103% and over the past three years, the total loss to shareholders 33%

Shareholders will probably not be too impressed with the underwhelming results at Lendlease Group (ASX:LLC) recently. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 14th of November. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. From our analysis, we think CEO compensation may need a review in light of the recent performance.

Check out our latest analysis for Lendlease Group

How Does Total Compensation For Tony Lombardo Compare With Other Companies In The Industry?

At the time of writing, our data shows that Lendlease Group has a market capitalization of AU$4.6b, and reported total annual CEO compensation of AU$2.7m for the year to June 2024. Notably, that's a decrease of 29% over the year before. Notably, the salary which is AU$1.78m, represents most of the total compensation being paid.

For comparison, other companies in the Australian Real Estate industry with market capitalizations ranging between AU$3.0b and AU$9.7b had a median total CEO compensation of AU$1.1m. Accordingly, our analysis reveals that Lendlease Group pays Tony Lombardo north of the industry median. Furthermore, Tony Lombardo directly owns AU$1.6m worth of shares in the company.

Component	2024	2023	Proportion (2024)
Salary	AU$1.8m	AU$1.8m	66%
Other	AU$898k	AU$2.0m	34%
Total Compensation	AU$2.7m	AU$3.8m	100%

On an industry level, roughly 73% of total compensation represents salary and 27% is other remuneration. Although there is a difference in how total compensation is set, Lendlease Group more or less reflects the market in terms of setting the salary. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Lendlease Group's Growth Numbers

Over the last three years, Lendlease Group has shrunk its earnings per share by 103% per year. In the last year, its revenue is down 9.7%.

The decline in EPS is a bit concerning. 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. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Lendlease Group Been A Good Investment?

Few Lendlease Group shareholders would feel satisfied with the return of -33% over three years. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 1 warning sign for Lendlease Group that investors should be aware of in a dynamic business environment.

Switching gears from Lendlease 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.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.