The results at Revlon, Inc. (NYSE:REV) have been quite disappointing recently and CEO Debbie Perelman bears some responsibility for this. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 03 June 2021. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. From our analysis, we think CEO compensation may need a review in light of the recent performance.
Comparing Revlon, Inc.'s CEO Compensation With the industry
At the time of writing, our data shows that Revlon, Inc. has a market capitalization of US$653m, and reported total annual CEO compensation of US$6.5m for the year to December 2020. That's a modest increase of 7.6% on the prior year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$937k.
On comparing similar companies from the same industry with market caps ranging from US$400m to US$1.6b, we found that the median CEO total compensation was US$1.3m. This suggests that Debbie Perelman is paid more than the median for the industry. Furthermore, Debbie Perelman directly owns US$1.4m worth of shares in the company.
Talking in terms of the industry, salary represented approximately 58% of total compensation out of all the companies we analyzed, while other remuneration made up 42% of the pie. In Revlon's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
Revlon, Inc.'s Growth
Over the last three years, Revlon, Inc. has shrunk its earnings per share by 23% per year. Its revenue is down 18% over the previous year.
The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last year. 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 Revlon, Inc. Been A Good Investment?
Since shareholders would have lost about 29% over three years, some Revlon, Inc. investors would surely be feeling negative emotions. So shareholders would probably want the company to be less generous with CEO compensation.
Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.
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 2 warning signs for Revlon you should be aware of, and 1 of them is significant.
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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