Stock Analysis

Increases to CEO Compensation Might Be Put On Hold For Now at Lifetime Brands, Inc. (NASDAQ:LCUT)

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NasdaqGS:LCUT
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The share price of Lifetime Brands, Inc. (NASDAQ:LCUT) has been growing in the past few years, however, the per-share earnings growth has been lacking, suggesting something is amiss. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 24 June 2021. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.

Check out our latest analysis for Lifetime Brands

How Does Total Compensation For Rob Kay Compare With Other Companies In The Industry?

Our data indicates that Lifetime Brands, Inc. has a market capitalization of US$341m, and total annual CEO compensation was reported as US$2.6m for the year to December 2020. Notably, that's a decrease of 15% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$763k.

In comparison with other companies in the industry with market capitalizations ranging from US$200m to US$800m, the reported median CEO total compensation was US$1.8m. This suggests that Rob Kay is paid more than the median for the industry. Furthermore, Rob Kay directly owns US$4.7m worth of shares in the company, implying that they are deeply invested in the company's success.

Component20202019Proportion (2020)
Salary US$763k US$800k 30%
Other US$1.8m US$2.2m 70%
Total CompensationUS$2.6m US$3.0m100%

Talking in terms of the industry, salary represented approximately 23% of total compensation out of all the companies we analyzed, while other remuneration made up 77% of the pie. Lifetime Brands is paying a higher share of its remuneration through a salary in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

ceo-compensation
NasdaqGS:LCUT CEO Compensation June 19th 2021

Lifetime Brands, Inc.'s Growth

Over the last three years, Lifetime Brands, Inc. has shrunk its earnings per share by 14% per year. It achieved revenue growth of 12% over the last year.

Few shareholders would be pleased to read that EPS have declined. While the revenue growth is good to see, it is outweighed by the fact that EPS are down, over three years. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Lifetime Brands, Inc. Been A Good Investment?

Lifetime Brands, Inc. has generated a total shareholder return of 28% over three years, so most shareholders would be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

Despite the positive returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about whether these returns will continue. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 2 warning signs for Lifetime Brands (of which 1 doesn't sit too well with us!) that you should know about in order to have a holistic understanding of the stock.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

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