Ron Lombardi became the CEO of Prestige Consumer Healthcare Inc. (NYSE:PBH) in 2015, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Comparing Prestige Consumer Healthcare Inc.'s CEO Compensation With the industry
Our data indicates that Prestige Consumer Healthcare Inc. has a market capitalization of US$2.1b, and total annual CEO compensation was reported as US$5.1m for the year to March 2020. Notably, that's an increase of 18% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at US$875k.
On examining similar-sized companies in the industry with market capitalizations between US$1.0b and US$3.2b, we discovered that the median CEO total compensation of that group was US$3.2m. This suggests that Ron Lombardi is paid more than the median for the industry. What's more, Ron Lombardi holds US$8.2m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Talking in terms of the industry, salary represented approximately 29% of total compensation out of all the companies we analyzed, while other remuneration made up 71% of the pie. In Prestige Consumer Healthcare's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
A Look at Prestige Consumer Healthcare Inc.'s Growth Numbers
Prestige Consumer Healthcare Inc. has reduced its earnings per share by 23% a year over the last three years. In the last year, its revenue changed by just 0.4%.
The decline in EPS is a bit concerning. And the flat revenue hardly impresses. 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 Prestige Consumer Healthcare Inc. Been A Good Investment?
With a total shareholder return of 18% over three years, Prestige Consumer Healthcare Inc. shareholders would, in general, be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.
As we noted earlier, Prestige Consumer Healthcare pays its CEO higher than the norm for similar-sized companies belonging to the same industry. Unfortunately, EPS has not grown in three years, failing to impress us. And shareholder returns are decent but not great. So you may want to delve deeper, because we don't think the amount Ron makes is justifiable.
We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 2 warning signs for Prestige Consumer Healthcare you should be aware of, and 1 of them is concerning.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
If you decide to trade Prestige Consumer Healthcare, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account. Promoted
Valuation is complex, but we're helping make it simple.
Find out whether Prestige Consumer Healthcare is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.View the Free Analysis
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.
Prestige Consumer Healthcare
Prestige Consumer Healthcare Inc., together with its subsidiaries, develops, manufactures, markets, distributes, and sells over-the-counter (OTC) health and personal care products in the United States and internationally.
Undervalued with proven track record.