Increases to CEO Compensation Might Be Put On Hold For Now at The Clorox Company (NYSE:CLX)

Key Insights

• Clorox to hold its Annual General Meeting on 20th of November
• Total pay for CEO Linda Rendle includes US$1.22m salary
• The overall pay is 39% above the industry average
• Clorox's EPS declined by 6.3% over the past three years while total shareholder return over the past three years was 7.6%

Despite The Clorox Company's (NYSE:CLX) share price growing positively in the past few years, the per-share earnings growth has not grown to investors' expectations, suggesting that there could be other factors at play driving the share price. The upcoming AGM on 20th of November may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.

See our latest analysis for Clorox

Comparing The Clorox Company's CEO Compensation With The Industry

At the time of writing, our data shows that The Clorox Company has a market capitalization of US$20b, and reported total annual CEO compensation of US$13m for the year to June 2024. We note that's an increase of 8.9% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.2m.

For comparison, other companies in the American Household Products industry with market capitalizations above US$8.0b, reported a median total CEO compensation of US$9.2m. Accordingly, our analysis reveals that The Clorox Company pays Linda Rendle north of the industry median. Furthermore, Linda Rendle directly owns US$2.9m worth of shares in the company.

Component	2024	2023	Proportion (2024)
Salary	US$1.2m	US$1.2m	10%
Other	US$11m	US$10m	90%
Total Compensation	US$13m	US$12m	100%

Talking in terms of the industry, salary represented approximately 11% of total compensation out of all the companies we analyzed, while other remuneration made up 89% of the pie. Clorox 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.

The Clorox Company's Growth

Over the last three years, The Clorox Company has shrunk its earnings per share by 6.3% per year. Its revenue is up 6.2% over the last year.

Few shareholders would be pleased to read that EPS have declined. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 The Clorox Company Been A Good Investment?

With a total shareholder return of 7.6% over three years, The Clorox Company has done okay by shareholders, but there's always room for improvement. 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...

Shareholder returns, while positive, should be looked at along with earnings, which have not grown at all recently. This makes us think the share price momentum may slow in the future. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 3 warning signs for Clorox (1 is concerning!) that you should be aware of before investing here.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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.