PepsiCo, Inc.'s (NASDAQ:PEP) CEO Compensation Is Looking A Bit Stretched At The Moment

Key Insights

• PepsiCo to hold its Annual General Meeting on 1st of May
• Total pay for CEO Ramon Laguarta includes US$1.69m salary
• The total compensation is 143% higher than the average for the industry
• PepsiCo's total shareholder return over the past three years was 33% while its EPS grew by 7.2% over the past three years

Performance at PepsiCo, Inc. (NASDAQ:PEP) has been reasonably good and CEO Ramon Laguarta has done a decent job of steering the company in the right direction. This is something shareholders will keep in mind as they cast their votes on company resolutions such as executive remuneration in the upcoming AGM on 1st of May. However, some shareholders may still be hesitant of being overly generous with CEO compensation.

See our latest analysis for PepsiCo

How Does Total Compensation For Ramon Laguarta Compare With Other Companies In The Industry?

At the time of writing, our data shows that PepsiCo, Inc. has a market capitalization of US$243b, and reported total annual CEO compensation of US$34m for the year to December 2023. That's a notable increase of 19% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.7m.

On comparing similar companies in the American Beverage industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$14m. Accordingly, our analysis reveals that PepsiCo, Inc. pays Ramon Laguarta north of the industry median. What's more, Ramon Laguarta holds US$33m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	US$1.7m	US$1.6m	5%
Other	US$32m	US$27m	95%
Total Compensation	US$34m	US$28m	100%

Talking in terms of the industry, salary represented approximately 13% of total compensation out of all the companies we analyzed, while other remuneration made up 87% of the pie. Interestingly, the company has chosen to go down an unconventional route in that it pays a smaller salary to Ramon Laguarta as compared to non-salary compensation over the one-year period examined. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

PepsiCo, Inc.'s Growth

PepsiCo, Inc. has seen its earnings per share (EPS) increase by 7.2% a year over the past three years. It achieved revenue growth of 4.4% over the last year.

We'd prefer higher revenue growth, but the modest improvement in EPS is good. So there are some positives here, but not enough to earn high praise. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has PepsiCo, Inc. Been A Good Investment?

We think that the total shareholder return of 33%, over three years, would leave most PepsiCo, Inc. shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

To Conclude...

PepsiCo primarily uses non-salary benefits to reward its CEO. The company's decent performance might have made most shareholders happy, possibly making CEO remuneration the least of the concerns to be discussed in the upcoming AGM. Still, not all shareholders might be in favor of a pay raise to the CEO, seeing that they are already being paid higher than the industry.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 3 warning signs for PepsiCo that investors should look into moving forward.

Switching gears from PepsiCo, 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.