Some Shareholders May Object To A Pay Rise For TripAdvisor, Inc.'s (NASDAQ:TRIP) CEO This Year

The underwhelming performance at TripAdvisor, Inc. (NASDAQ:TRIP) recently has probably not pleased shareholders. At the upcoming AGM on 08 June 2021, shareholders may have the opportunity to influence management to turn the performance around by voting on resolutions such as executive remuneration and other matters. From our analysis below, we think CEO compensation looks appropriate for now.

Check out our latest analysis for TripAdvisor

Comparing TripAdvisor, Inc.'s CEO Compensation With the industry

According to our data, TripAdvisor, Inc. has a market capitalization of US$5.9b, and paid its CEO total annual compensation worth US$919k over the year to December 2020. Notably, that's a decrease of 63% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$184k.

On comparing similar companies from the same industry with market caps ranging from US$4.0b to US$12b, we found that the median CEO total compensation was US$1.6m. That is to say, Steve Kaufer is paid under the industry median. Furthermore, Steve Kaufer directly owns US$28m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2020	2019	Proportion (2020)
Salary	US$184k	US$820k	20%
Other	US$735k	US$1.6m	80%
Total Compensation	US$919k	US$2.5m	100%

Talking in terms of the industry, salary represented approximately 15% of total compensation out of all the companies we analyzed, while other remuneration made up 85% of the pie. It's interesting to note that TripAdvisor pays out a greater portion of remuneration through salary, compared to the industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

TripAdvisor, Inc.'s Growth

TripAdvisor, Inc. has reduced its earnings per share by 82% a year over the last three years. Its revenue is down 69% over the previous year.

Few shareholders would be pleased to read that EPS have declined. And the fact that revenue is down year on year arguably paints an ugly picture. 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 TripAdvisor, Inc. Been A Good Investment?

Since shareholders would have lost about 13% over three years, some TripAdvisor, Inc. investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

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, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 4 warning signs for TripAdvisor (of which 1 doesn't sit too well with us!) that you should know about in order to have a holistic understanding of the 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.

When trading TripAdvisor or any other investment, use the platform considered by many to be the Professional's Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.