The Clorox Company's (NYSE:CLX) CEO Might Not Expect Shareholders To Be So Generous This Year

Key Insights

• Clorox to hold its Annual General Meeting on 15th of November
• Total pay for CEO Linda Rendle includes US$1.17m salary
• The overall pay is comparable to the industry average
• Clorox's EPS declined by 58% over the past three years while total shareholder loss over the past three years was 29%

Shareholders will probably not be too impressed with the underwhelming results at The Clorox Company (NYSE:CLX) recently. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 15th of November. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. We present the case why we think CEO compensation is out of sync with company performance.

View our latest analysis for Clorox

Comparing The Clorox Company's CEO Compensation With The Industry

Our data indicates that The Clorox Company has a market capitalization of US$16b, and total annual CEO compensation was reported as US$12m for the year to June 2023. We note that's an increase of 36% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, 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$11m. This suggests that Clorox remunerates its CEO largely in line with the industry average. What's more, Linda Rendle holds US$5.6m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	US$1.2m	US$1.1m	10%
Other	US$10m	US$7.4m	90%
Total Compensation	US$12m	US$8.5m	100%

Speaking on an industry level, nearly 23% of total compensation represents salary, while the remainder of 77% is other remuneration. Clorox pays a modest slice of remuneration through salary, as compared 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.

A Look at The Clorox Company's Growth Numbers

The Clorox Company has reduced its earnings per share by 58% a year over the last three years. The trailing twelve months of revenue was pretty much the same as the prior period.

The decline in EPS is a bit concerning. And the flat revenue is seriously uninspiring. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has The Clorox Company Been A Good Investment?

Given the total shareholder loss of 29% over three years, many shareholders in The Clorox Company are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 4 warning signs for Clorox that investors should think about before committing capital to this stock.

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.