Avaya Holdings Corp.'s (NYSE:AVYA) CEO Compensation Is Looking A Bit Stretched At The Moment

Shareholders of Avaya Holdings Corp. (NYSE:AVYA) will have been dismayed by the negative share price return over the last three years. 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 02 March 2022. They could also influence management through voting on resolutions such as executive remuneration. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.

See our latest analysis for Avaya Holdings

How Does Total Compensation For Jim Chirico Compare With Other Companies In The Industry?

Our data indicates that Avaya Holdings Corp. has a market capitalization of US$1.1b, and total annual CEO compensation was reported as US$14m for the year to September 2021. We note that's an increase of 24% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.3m.

For comparison, other companies in the same industry with market capitalizations ranging between US$400m and US$1.6b had a median total CEO compensation of US$2.5m. This suggests that Jim Chirico is paid more than the median for the industry. Moreover, Jim Chirico also holds US$14m worth of Avaya Holdings stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2021	2020	Proportion (2021)
Salary	US$1.3m	US$1.3m	9%
Other	US$13m	US$9.9m	91%
Total Compensation	US$14m	US$11m	100%

On an industry level, roughly 16% of total compensation represents salary and 84% is other remuneration. Avaya Holdings 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.

Avaya Holdings Corp.'s Growth

Avaya Holdings Corp. has seen its earnings per share (EPS) increase by 8.9% a year over the past three years. Its revenue is up 1.4% over the last year.

We're not particularly impressed by the revenue growth, but we're happy with the modest EPS growth. So there are some positives here, but not enough to earn high praise. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Avaya Holdings Corp. Been A Good Investment?

With a three year total loss of 17% for the shareholders, Avaya Holdings Corp. would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. In our study, we found 3 warning signs for Avaya Holdings you should be aware of, and 1 of them can't be ignored.

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. 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.