Increases to CEO Compensation Might Be Put On Hold For Now at eBay Inc. (NASDAQ:EBAY)

Key Insights

• eBay will host its Annual General Meeting on 20th of June
• Total pay for CEO Jamie Iannone includes US$1.00m salary
• The total compensation is 159% higher than the average for the industry
• eBay's EPS grew by 11% over the past three years while total shareholder loss over the past three years was 13%

In the past three years, the share price of eBay Inc. (NASDAQ:EBAY) 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. These are some of the concerns that shareholders may want to bring up at the next AGM held on 20th of June. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

Check out our latest analysis for eBay

Comparing eBay Inc.'s CEO Compensation With The Industry

Our data indicates that eBay Inc. has a market capitalization of US$27b, and total annual CEO compensation was reported as US$22m for the year to December 2023. We note that's an increase of 27% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.0m.

On comparing similar companies in the American Multiline Retail industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$8.3m. Hence, we can conclude that Jamie Iannone is remunerated higher than the industry median. Furthermore, Jamie Iannone directly owns US$29m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	US$1.0m	US$1.0m	5%
Other	US$21m	US$16m	95%
Total Compensation	US$22m	US$17m	100%

On an industry level, roughly 17% of total compensation represents salary and 83% is other remuneration. A high-salary is usually a no-brainer when it comes to attracting the best executives, but eBay paid Jamie Iannone a nominal salary to the CEO over the past 12 months, instead focusing on non-salary compensation. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at eBay Inc.'s Growth Numbers

eBay Inc. has seen its earnings per share (EPS) increase by 11% a year over the past three years. In the last year, its revenue is up 3.4%.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's nice to see revenue heading northwards, as this is consistent with healthy business conditions. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has eBay Inc. Been A Good Investment?

Given the total shareholder loss of 13% over three years, many shareholders in eBay Inc. are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

eBay primarily uses non-salary benefits to reward its CEO. The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. Shareholders would be keen to know what's holding the stock back when earnings have grown. 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.

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 4 warning signs for eBay you should be aware of, and 1 of them is a bit unpleasant.

Switching gears from eBay, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.

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