This Is Why Brown-Forman Corporation's (NYSE:BF.B) CEO Can Expect A Bump Up In Their Pay Packet

By
Simply Wall St
Published
July 16, 2021
NYSE:BF.B
Source: Shutterstock

Shareholders will probably not be disappointed by the robust results at Brown-Forman Corporation (NYSE:BF.B) recently and they will be keeping this in mind as they go into the AGM on 22 July 2021. The focus will probably be on the future strategic initiatives that the board and management will put in place to improve the business rather than executive remuneration when they cast their votes on company resolutions. Here is our take on why we think CEO compensation is fair and may even warrant a raise.

Check out our latest analysis for Brown-Forman

How Does Total Compensation For Lawson Whiting Compare With Other Companies In The Industry?

According to our data, Brown-Forman Corporation has a market capitalization of US$34b, and paid its CEO total annual compensation worth US$9.1m over the year to April 2021. We note that's an increase of 47% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.2m.

On comparing similar companies in the industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$14m. Accordingly, Brown-Forman pays its CEO under the industry median. Moreover, Lawson Whiting also holds US$2.0m worth of Brown-Forman stock directly under their own name.

Component20212020Proportion (2021)
Salary US$1.2m US$1.1m 13%
Other US$7.9m US$5.1m 87%
Total CompensationUS$9.1m US$6.2m100%

On an industry level, roughly 21% of total compensation represents salary and 79% is other remuneration. Brown-Forman pays a modest slice of remuneration through salary, as compared 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
NYSE:BF.B CEO Compensation July 16th 2021

Brown-Forman Corporation's Growth

Brown-Forman Corporation has seen its earnings per share (EPS) increase by 8.1% a year over the past three years. In the last year, its revenue is up 2.9%.

We're not particularly impressed by the revenue growth, but we're happy with the modest EPS growth. Considering these factors we'd say performance has been pretty decent, though not amazing. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Brown-Forman Corporation Been A Good Investment?

Boasting a total shareholder return of 44% over three years, Brown-Forman Corporation has done well by shareholders. 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.

In Summary...

While the company seems to be headed in the right direction performance-wise, there's always room for improvement. Assuming the business continues to grow at a good clip, few shareholders would raise any objections to the CEO's remuneration. Instead, investors might be more interested in discussions that would help manage their longer-term growth expectations such as company business strategies and future growth potential.

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 Brown-Forman that investors should look into moving forward.

Switching gears from Brown-Forman, 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.

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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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