What Does Vector Group's (NYSE:VGR) CEO Pay Reveal?

By
Simply Wall St
Published
November 03, 2020
NYSE:VGR

Howard Lorber became the CEO of Vector Group Ltd. (NYSE:VGR) in 2006, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Vector Group.

Check out our latest analysis for Vector Group

Comparing Vector Group Ltd.'s CEO Compensation With the industry

At the time of writing, our data shows that Vector Group Ltd. has a market capitalization of US$1.4b, and reported total annual CEO compensation of US$12m for the year to December 2019. Notably, that's an increase of 38% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at US$3.3m.

On comparing similar companies from the same industry with market caps ranging from US$1.0b to US$3.2b, we found that the median CEO total compensation was US$2.0m. Hence, we can conclude that Howard Lorber is remunerated higher than the industry median. Moreover, Howard Lorber also holds US$36m worth of Vector Group stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20192018Proportion (2019)
Salary US$3.3m US$3.2m 28%
Other US$8.4m US$5.2m 72%
Total CompensationUS$12m US$8.4m100%

Speaking on an industry level, nearly 31% of total compensation represents salary, while the remainder of 69% is other remuneration. Our data reveals that Vector Group allocates salary more or less in line with the wider market. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

ceo-compensation
NYSE:VGR CEO Compensation November 3rd 2020

Vector Group Ltd.'s Growth

Vector Group Ltd.'s earnings per share (EPS) grew 11% per year over the last three years. In the last year, its revenue is down 4.8%.

Shareholders would be glad to know that the company has improved itself over the last few years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. 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 Vector Group Ltd. Been A Good Investment?

Given the total shareholder loss of 33% over three years, many shareholders in Vector Group Ltd. are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

As previously discussed, Howard is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. However, the EPS growth is certainly impressive, but it's disappointing to see negative shareholder returns over the same period. Although we'd stop short of calling it inappropriate, we think Howard is earning a very handsome sum.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. In our study, we found 5 warning signs for Vector Group you should be aware of, and 1 of them is significant.

Important note: Vector Group 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. 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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