How Should Investors React To Lancaster Colony's (NASDAQ:LANC) CEO Pay?

By
Simply Wall St
Published
February 02, 2021
NasdaqGS:LANC
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This article will reflect on the compensation paid to Dave Ciesinski who has served as CEO of Lancaster Colony Corporation (NASDAQ:LANC) since 2017. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

View our latest analysis for Lancaster Colony

How Does Total Compensation For Dave Ciesinski Compare With Other Companies In The Industry?

Our data indicates that Lancaster Colony Corporation has a market capitalization of US$4.9b, and total annual CEO compensation was reported as US$3.9m for the year to June 2020. Notably, that's an increase of 11% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$800k.

In comparison with other companies in the industry with market capitalizations ranging from US$4.0b to US$12b, the reported median CEO total compensation was US$7.1m. Accordingly, Lancaster Colony pays its CEO under the industry median. Furthermore, Dave Ciesinski directly owns US$6.9m worth of shares in the company, implying that they are deeply invested in the company's success.

Component20202019Proportion (2020)
Salary US$800k US$775k 20%
Other US$3.1m US$2.8m 80%
Total CompensationUS$3.9m US$3.6m100%

On an industry level, roughly 24% of total compensation represents salary and 76% is other remuneration. It's interesting to note that Lancaster Colony allocates a smaller portion of compensation to salary in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

ceo-compensation
NasdaqGS:LANC CEO Compensation February 3rd 2021

A Look at Lancaster Colony Corporation's Growth Numbers

Lancaster Colony Corporation has seen its earnings per share (EPS) increase by 6.1% a year over the past three years. In the last year, its revenue is up 1.4%.

We'd prefer higher revenue growth, but it is good to see modest EPS growth. Considering these factors we'd say performance has been pretty decent, though not amazing. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Lancaster Colony Corporation Been A Good Investment?

Most shareholders would probably be pleased with Lancaster Colony Corporation for providing a total return of 55% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary...

As we noted earlier, Lancaster Colony pays its CEO lower than the norm for similar-sized companies belonging to the same industry. On the other hand, shareholder returns have been have been very pleasing, over the last three years, and that should put a smile on the faces of investors. Considering this fine result for investors, we believe CEO compensation to be apt.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 1 warning sign for Lancaster Colony 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. 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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