In 1963 Les Wexner was appointed CEO of L Brands, Inc. (NYSE:LB). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
See our latest analysis for L Brands
How Does Les Wexner's Compensation Compare With Similar Sized Companies?
Our data indicates that L Brands, Inc. is worth US$5.6b, and total annual CEO compensation was reported as US$4.6m for the year to February 2019. While we always look at total compensation first, we note that the salary component is less, at US$1.0m. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. We looked at a group of companies with market capitalizations from US$4.0b to US$12b, and the median CEO total compensation was US$6.5m.
So Les Wexner is paid around the average of the companies we looked at. Although this fact alone doesn't tell us a great deal, it becomes more relevant when considered against the business performance.
The graphic below shows how CEO compensation at L Brands has changed from year to year.
Is L Brands, Inc. Growing?
Over the last three years L Brands, Inc. has shrunk its earnings per share by an average of 26% per year (measured with a line of best fit). In the last year, its revenue is down 1.1%.
Sadly for shareholders, earnings per share are actually down, over three years. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. It could be important to check this free visual depiction of what analysts expect for the future.
Has L Brands, Inc. Been A Good Investment?
With a three year total loss of 61%, L Brands, Inc. would certainly have some dissatisfied shareholders. It therefore might be upsetting for shareholders if the CEO were paid generously.
In Summary...
Les Wexner is paid around the same as most CEOs of similar size companies.
After looking at EPS and total shareholder returns, it's certainly hard to argue the company has performed well, since both metrics are down. Suffice it to say, we don't think the CEO is underpaid! So you may want to check if insiders are buying L Brands shares with their own money (free access).
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.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.