Should Shareholders Reconsider Topgolf Callaway Brands Corp.'s (NYSE:MODG) CEO Compensation Package?

Key Insights

• Topgolf Callaway Brands' Annual General Meeting to take place on 30th of May
• Total pay for CEO Chip Brewer includes US$1.10m salary
• Total compensation is similar to the industry average
• Topgolf Callaway Brands' EPS declined by 29% over the past three years while total shareholder loss over the past three years was 60%

The results at Topgolf Callaway Brands Corp. (NYSE:MODG) have been quite disappointing recently and CEO Chip Brewer bears some responsibility for this. At the upcoming AGM on 30th of May, 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.

See our latest analysis for Topgolf Callaway Brands

Comparing Topgolf Callaway Brands Corp.'s CEO Compensation With The Industry

Our data indicates that Topgolf Callaway Brands Corp. has a market capitalization of US$2.7b, and total annual CEO compensation was reported as US$11m for the year to December 2023. That's mostly flat as compared to the prior year's compensation. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.1m.

On comparing similar companies from the American Leisure industry with market caps ranging from US$2.0b to US$6.4b, we found that the median CEO total compensation was US$10m. This suggests that Topgolf Callaway Brands remunerates its CEO largely in line with the industry average. Moreover, Chip Brewer also holds US$21m worth of Topgolf Callaway Brands stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	US$1.1m	US$1.0m	10%
Other	US$10m	US$10.0m	90%
Total Compensation	US$11m	US$11m	100%

On an industry level, roughly 30% of total compensation represents salary and 70% is other remuneration. Topgolf Callaway Brands 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.

Topgolf Callaway Brands Corp.'s Growth

Topgolf Callaway Brands Corp. has reduced its earnings per share by 29% a year over the last three years. Its revenue is up 3.4% over the last year.

The decline in EPS is a bit concerning. The fairly low revenue growth fails to impress given that the EPS is down. 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 Topgolf Callaway Brands Corp. Been A Good Investment?

Few Topgolf Callaway Brands Corp. shareholders would feel satisfied with the return of -60% over three years. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

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.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 1 warning sign for Topgolf Callaway Brands that investors should think about before committing capital to this stock.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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.