Increases to CEO Compensation Might Be Put On Hold For Now at Vector Group Ltd. (NYSE:VGR)

By
Simply Wall St
Published
May 28, 2021
NYSE:VGR
Source: Shutterstock

CEO Howard Lorber has done a decent job of delivering relatively good performance at Vector Group Ltd. (NYSE:VGR) recently. As shareholders go into the upcoming AGM on 03 June 2021, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. However, some shareholders may still be hesitant of being overly generous with CEO compensation.

View our latest analysis for Vector Group

How Does Total Compensation For Howard Lorber Compare With Other Companies In The Industry?

According to our data, Vector Group Ltd. has a market capitalization of US$2.2b, and paid its CEO total annual compensation worth US$16m over the year to December 2020. Notably, that's an increase of 35% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at US$3.4m.

On examining similar-sized companies in the industry with market capitalizations between US$1.0b and US$3.2b, we discovered that the median CEO total compensation of that group was US$3.2m. Hence, we can conclude that Howard Lorber is remunerated higher than the industry median. What's more, Howard Lorber holds US$72m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component20202019Proportion (2020)
Salary US$3.4m US$3.3m 21%
Other US$12m US$8.4m 79%
Total CompensationUS$16m US$12m100%

On an industry level, roughly 28% of total compensation represents salary and 72% is other remuneration. In Vector Group's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

ceo-compensation
NYSE:VGR CEO Compensation May 28th 2021

A Look at Vector Group Ltd.'s Growth Numbers

Over the past three years, Vector Group Ltd. has seen its earnings per share (EPS) grow by 11% per year. Its revenue is up 11% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. 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 Vector Group Ltd. Been A Good Investment?

Vector Group Ltd. has not done too badly by shareholders, with a total return of 10.0%, over three years. It would be nice to see that metric improve in the future. As a result, investors in the company might be reluctant about agreeing to increase CEO pay in the future, before seeing an improvement on their returns.

To Conclude...

Seeing that the company has put up a decent performance, only a few shareholders, if any at all, might have questions about the CEO pay in the upcoming AGM. However, any decision to raise CEO pay might be met with some objections from the shareholders given that the CEO is already paid higher than the industry average.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We did our research and identified 4 warning signs (and 2 which are concerning) in Vector Group we think you should know about.

Switching gears from Vector Group, 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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