A Quick Analysis On Movado Group's (NYSE:MOV) CEO Compensation

By
Simply Wall St
Published
October 15, 2020
NYSE:MOV

Efraim Grinberg has been the CEO of Movado Group, Inc. (NYSE:MOV) since 2001, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Movado Group.

View our latest analysis for Movado Group

How Does Total Compensation For Efraim Grinberg Compare With Other Companies In The Industry?

At the time of writing, our data shows that Movado Group, Inc. has a market capitalization of US$243m, and reported total annual CEO compensation of US$3.7m for the year to January 2020. Notably, that's a decrease of 32% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.2m.

In comparison with other companies in the industry with market capitalizations ranging from US$100m to US$400m, the reported median CEO total compensation was US$1.6m. Accordingly, our analysis reveals that Movado Group, Inc. pays Efraim Grinberg north of the industry median. Furthermore, Efraim Grinberg directly owns US$28m worth of shares in the company, implying that they are deeply invested in the company's success.

Component20202019Proportion (2020)
Salary US$1.2m US$1.1m 32%
Other US$2.5m US$4.3m 68%
Total CompensationUS$3.7m US$5.5m100%

On an industry level, roughly 30% of total compensation represents salary and 70% is other remuneration. Our data reveals that Movado Group allocates salary more or less in line with the wider market. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

ceo-compensation
NYSE:MOV CEO Compensation October 15th 2020

A Look at Movado Group, Inc.'s Growth Numbers

Over the last three years, Movado Group, Inc. has shrunk its earnings per share by 50% per year. Its revenue is down 22% over the previous year.

Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. 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 Movado Group, Inc. Been A Good Investment?

Since shareholders would have lost about 61% over three years, some Movado Group, Inc. investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

As previously discussed, Efraim is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. This doesn't look good against shareholder returns, which have been negative for the past three years. Add to that declining EPS growth, and you have the perfect recipe for shareholder irritation. Understandably, the company's shareholders might have some questions about the CEO's remuneration, given the disappointing performance.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 1 warning sign for Movado Group that investors should look into moving forward.

Important note: Movado Group 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.

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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.
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