The results at Samsonite International S.A. (HKG:1910) have been quite disappointing recently and CEO Kyle Gendreau bears some responsibility for this. At the upcoming AGM on 03 June 2021, shareholders can hear from the board including their plans for turning around performance. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. We present the case why we think CEO compensation is out of sync with company performance.
How Does Total Compensation For Kyle Gendreau Compare With Other Companies In The Industry?
Our data indicates that Samsonite International S.A. has a market capitalization of HK$21b, and total annual CEO compensation was reported as US$3.3m for the year to December 2020. We note that's a decrease of 25% compared to last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.0m.
On examining similar-sized companies in the industry with market capitalizations between HK$16b and HK$50b, we discovered that the median CEO total compensation of that group was US$617k. This suggests that Kyle Gendreau is paid more than the median for the industry. What's more, Kyle Gendreau holds HK$25m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Speaking on an industry level, nearly 93% of total compensation represents salary, while the remainder of 7% is other remuneration. Samsonite International pays a modest slice of remuneration through salary, as compared 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.
Samsonite International S.A.'s Growth
Over the last three years, Samsonite International S.A. has shrunk its earnings per share by 107% per year. It saw its revenue drop 62% over the last year.
Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. 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 Samsonite International S.A. Been A Good Investment?
The return of -48% over three years would not have pleased Samsonite International S.A. shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 1 warning sign for Samsonite International that investors should think about before committing capital to this stock.
Important note: Samsonite International 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.
If you’re looking to trade a wide range of investments, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted
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.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.