Macy's, Inc. (NYSE:M) has not performed well recently and CEO Jeff Gennette will probably need to up their game. At the upcoming AGM on 21 May 2021, shareholders can hear from the board including their plans for turning around performance. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. We present the case why we think CEO compensation is out of sync with company performance.
How Does Total Compensation For Jeff Gennette Compare With Other Companies In The Industry?
Our data indicates that Macy's, Inc. has a market capitalization of US$5.6b, and total annual CEO compensation was reported as US$11m for the year to January 2021. That's a modest increase of 7.5% on the prior year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$975k.
On examining similar-sized companies in the industry with market capitalizations between US$4.0b and US$12b, we discovered that the median CEO total compensation of that group was US$3.7m. This suggests that Jeff Gennette is paid more than the median for the industry. Furthermore, Jeff Gennette directly owns US$3.1m worth of shares in the company, implying that they are deeply invested in the company's success.
Speaking on an industry level, nearly 12% of total compensation represents salary, while the remainder of 88% is other remuneration. It's interesting to note that Macy's allocates a smaller portion of compensation to salary 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.
Macy's, Inc.'s Growth
Over the last three years, Macy's, Inc. has shrunk its earnings per share by 108% per year. In the last year, its revenue is down 29%.
Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Macy's, Inc. Been A Good Investment?
With a total shareholder return of -38% over three years, Macy's, Inc. shareholders would by and large be disappointed. This suggests it would be unwise for the company to pay the CEO too generously.
Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 1 warning sign for Macy's that you should be aware of before investing.
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.
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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.
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