Increases to Target Corporation's (NYSE:TGT) CEO Compensation Might Cool off for now

By
Simply Wall St
Published
June 02, 2021
NYSE:TGT
Source: Shutterstock

CEO Brian Cornell has done a decent job of delivering relatively good performance at Target Corporation (NYSE:TGT) recently. As shareholders go into the upcoming AGM on 09 June 2021, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. However, some shareholders may still be hesitant of being overly generous with CEO compensation.

Check out our latest analysis for Target

Comparing Target Corporation's CEO Compensation With the industry

Our data indicates that Target Corporation has a market capitalization of US$113b, and total annual CEO compensation was reported as US$20m for the year to January 2021. That's a fairly small increase of 4.3% over the previous year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.4m.

In comparison with other companies in the industry with market capitalizations over US$8.0b , the reported median total CEO compensation was US$12m. Accordingly, our analysis reveals that Target Corporation pays Brian Cornell north of the industry median. Furthermore, Brian Cornell directly owns US$71m worth of shares in the company, implying that they are deeply invested in the company's success.

Component20212020Proportion (2021)
Salary US$1.4m US$1.4m 7%
Other US$18m US$18m 93%
Total CompensationUS$20m US$19m100%

Speaking on an industry level, nearly 11% of total compensation represents salary, while the remainder of 89% is other remuneration. Target sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

ceo-compensation
NYSE:TGT CEO Compensation June 3rd 2021

Target Corporation's Growth

Target Corporation's earnings per share (EPS) grew 32% per year over the last three years. Its revenue is up 23% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. 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 Target Corporation Been A Good Investment?

We think that the total shareholder return of 214%, over three years, would leave most Target Corporation shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary...

Given that the company's overall performance has been reasonable, the CEO remuneration policy might not be shareholders' central point of focus in the upcoming AGM. However, any decision to raise CEO pay might be met with some objections from the shareholders given that the CEO is already paid higher than the industry average.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 3 warning signs for Target that investors should think about before committing capital to this stock.

Important note: Target is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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