Stock Analysis

Increases to CEO Compensation Might Be Put On Hold For Now at Caesars Entertainment, Inc. (NASDAQ:CZR)

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Key Insights

  • Caesars Entertainment to hold its Annual General Meeting on 11th of June
  • CEO Tom Reeg's total compensation includes salary of US$2.00m
  • Total compensation is 82% above industry average
  • Caesars Entertainment's three-year loss to shareholders was 68% while its EPS grew by 105% over the past three years

Shareholders of Caesars Entertainment, Inc. (NASDAQ:CZR) will have been dismayed by the negative share price return over the last three years. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 11th of June. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

Check out our latest analysis for Caesars Entertainment

How Does Total Compensation For Tom Reeg Compare With Other Companies In The Industry?

According to our data, Caesars Entertainment, Inc. has a market capitalization of US$7.7b, and paid its CEO total annual compensation worth US$19m over the year to December 2023. We note that's a decrease of 41% compared to last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$2.0m.

In comparison with other companies in the American Hospitality industry with market capitalizations ranging from US$4.0b to US$12b, the reported median CEO total compensation was US$10m. Accordingly, our analysis reveals that Caesars Entertainment, Inc. pays Tom Reeg north of the industry median. What's more, Tom Reeg holds US$17m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component20232022Proportion (2023)
Salary US$2.0m US$2.0m 11%
Other US$17m US$29m 89%
Total CompensationUS$19m US$31m100%

Talking in terms of the industry, salary represented approximately 18% of total compensation out of all the companies we analyzed, while other remuneration made up 82% of the pie. Caesars Entertainment sets aside a smaller share of compensation for salary, in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

NasdaqGS:CZR CEO Compensation June 5th 2024

A Look at Caesars Entertainment, Inc.'s Growth Numbers

Caesars Entertainment, Inc. has seen its earnings per share (EPS) increase by 105% a year over the past three years. The trailing twelve months of revenue was pretty much the same as the prior period.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's also good to see modest revenue growth, suggesting the underlying business is healthy. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Caesars Entertainment, Inc. Been A Good Investment?

The return of -68% over three years would not have pleased Caesars Entertainment, Inc. shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 2 warning signs for Caesars Entertainment you should be aware of, and 1 of them shouldn't be ignored.

Switching gears from Caesars Entertainment, 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.

Valuation is complex, but we're helping make it simple.

Find out whether Caesars Entertainment is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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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.