Lumentum Holdings Inc.'s (NASDAQ:LITE) CEO Might Not Expect Shareholders To Be So Generous This Year

Key Insights

• Lumentum Holdings' Annual General Meeting to take place on 17th of November
• CEO Alan Lowe's total compensation includes salary of US$980.8k
• The total compensation is similar to the average for the industry
• Lumentum Holdings' EPS declined by 73% over the past three years while total shareholder loss over the past three years was 52%

The results at Lumentum Holdings Inc. (NASDAQ:LITE) have been quite disappointing recently and CEO Alan Lowe bears some responsibility for this. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 17th of November. 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. From our analysis, we think CEO compensation may need a review in light of the recent performance.

View our latest analysis for Lumentum Holdings

How Does Total Compensation For Alan Lowe Compare With Other Companies In The Industry?

Our data indicates that Lumentum Holdings Inc. has a market capitalization of US$2.6b, and total annual CEO compensation was reported as US$14m for the year to July 2023. Notably, that's an increase of 29% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$981k.

For comparison, other companies in the American Communications industry with market capitalizations ranging between US$2.0b and US$6.4b had a median total CEO compensation of US$14m. From this we gather that Alan Lowe is paid around the median for CEOs in the industry. Furthermore, Alan Lowe directly owns US$3.5m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	US$981k	US$881k	7%
Other	US$13m	US$9.9m	93%
Total Compensation	US$14m	US$11m	100%

On an industry level, roughly 20% of total compensation represents salary and 80% is other remuneration. In Lumentum Holdings' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at Lumentum Holdings Inc.'s Growth Numbers

Lumentum Holdings Inc. has reduced its earnings per share by 73% a year over the last three years. In the last year, its revenue is down 11%.

Overall this is not a very positive result for shareholders. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Lumentum Holdings Inc. Been A Good Investment?

Few Lumentum Holdings Inc. shareholders would feel satisfied with the return of -52% over three years. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

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, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 1 warning sign for Lumentum Holdings that investors should look into moving forward.

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.

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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.