We Think Shareholders Are Less Likely To Approve A Pay Rise For Amcor plc's (NYSE:AMCR) CEO For Now

Key Insights

• Amcor to hold its Annual General Meeting on 8th of November
• CEO Ron Delia's total compensation includes salary of US$1.74m
• The total compensation is similar to the average for the industry
• Amcor's three-year loss to shareholders was 11% while its EPS grew by 13% over the past three years

In the past three years, the share price of Amcor plc (NYSE:AMCR) has struggled to generate growth for its shareholders. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. The AGM coming up on the 8th of November could be an opportunity for shareholders to bring these concerns to the board's attention. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.

Check out our latest analysis for Amcor

Comparing Amcor plc's CEO Compensation With The Industry

According to our data, Amcor plc has a market capitalization of US$12b, and paid its CEO total annual compensation worth US$7.3m over the year to June 2023. Notably, that's a decrease of 26% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.7m.

For comparison, other companies in the American Packaging industry with market capitalizations above US$8.0b, reported a median total CEO compensation of US$9.1m. This suggests that Amcor remunerates its CEO largely in line with the industry average. Furthermore, Ron Delia directly owns US$16m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	US$1.7m	US$1.7m	24%
Other	US$5.6m	US$8.2m	76%
Total Compensation	US$7.3m	US$9.9m	100%

On an industry level, around 14% of total compensation represents salary and 86% is other remuneration. It's interesting to note that Amcor pays out a greater portion of remuneration through salary, compared to the industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

Amcor plc's Growth

Amcor plc's earnings per share (EPS) grew 13% per year over the last three years. Its revenue is down 2.8% over the previous year.

This demonstrates that the company has been improving recently and is good news for the shareholders. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Amcor plc Been A Good Investment?

With a three year total loss of 11% for the shareholders, Amcor plc would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

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. We did our research and identified 2 warning signs (and 1 which doesn't sit too well with us) in Amcor we think you should know about.

Important note: Amcor 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. 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.