We Think Shareholders Are Less Likely To Approve A Pay Rise For Flowers Foods, Inc.'s (NYSE:FLO) CEO For Now

Key Insights

• Flowers Foods' Annual General Meeting to take place on 22nd of May
• CEO A. McMullian's total compensation includes salary of US$987.9k
• The overall pay is comparable to the industry average
• Flowers Foods' EPS grew by 6.5% over the past three years while total shareholder loss over the past three years was 24%

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Shareholders of Flowers Foods, Inc. (NYSE:FLO) will have been dismayed by the negative share price return over the last three years. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 22nd of May. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

See our latest analysis for Flowers Foods

Comparing Flowers Foods, Inc.'s CEO Compensation With The Industry

At the time of writing, our data shows that Flowers Foods, Inc. has a market capitalization of US$3.6b, and reported total annual CEO compensation of US$7.9m for the year to December 2024. Notably, that's an increase of 24% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$988k.

On comparing similar companies from the American Food industry with market caps ranging from US$2.0b to US$6.4b, we found that the median CEO total compensation was US$6.2m. From this we gather that A. McMullian is paid around the median for CEOs in the industry. What's more, A. McMullian holds US$50m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2024	2023	Proportion (2024)
Salary	US$988k	US$954k	12%
Other	US$7.0m	US$5.4m	88%
Total Compensation	US$7.9m	US$6.4m	100%

On an industry level, roughly 21% of total compensation represents salary and 79% is other remuneration. Flowers Foods pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Flowers Foods, Inc.'s Growth Numbers

Flowers Foods, Inc. has seen its earnings per share (EPS) increase by 6.5% a year over the past three years. In the last year, its revenue changed by just 0.3%.

We would argue that the improvement in revenue is good, but isn't particularly impressive, but the modest improvement in EPS is good. Considering these factors we'd say performance has been pretty decent, though not amazing. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Flowers Foods, Inc. Been A Good Investment?

With a three year total loss of 24% for the shareholders, Flowers Foods, Inc. would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

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 1 warning sign for Flowers Foods that investors should look into moving forward.

Important note: Flowers Foods 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. 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.