Here's Why Shareholders May Want To Be Cautious With Increasing Verizon Communications Inc.'s (NYSE:VZ) CEO Pay Packet

Key Insights

• Verizon Communications to hold its Annual General Meeting on 22nd of May
• Salary of US$1.50m is part of CEO Hans Vestberg's total remuneration
• The overall pay is 60% above the industry average
• Verizon Communications' total shareholder return over the past three years was 5.6% while its EPS was down 6.4% over the past three years

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Despite Verizon Communications Inc.'s (NYSE:VZ) share price growing positively in the past few years, the per-share earnings growth has not grown to investors' expectations, suggesting that there could be other factors at play driving the share price. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 22nd of May. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.

View our latest analysis for Verizon Communications

Comparing Verizon Communications Inc.'s CEO Compensation With The Industry

According to our data, Verizon Communications Inc. has a market capitalization of US$180b, and paid its CEO total annual compensation worth US$24m over the year to December 2024. This means that the compensation hasn't changed much from last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.5m.

In comparison with other companies in the American Telecom industry with market capitalizations over US$8.0b, the reported median total CEO compensation was US$15m. Hence, we can conclude that Hans Vestberg is remunerated higher than the industry median. Furthermore, Hans Vestberg directly owns US$24m worth of shares in the company, implying that they are deeply invested in the company's success.

On an industry level, roughly 24% of total compensation represents salary and 76% is other remuneration. Verizon Communications sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

Verizon Communications Inc.'s Growth

Verizon Communications Inc. has reduced its earnings per share by 6.4% a year over the last three years. In the last year, its revenue changed by just 0.9%.

Few shareholders would be pleased to read that EPS have declined. And the flat revenue hardly impresses. 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 Verizon Communications Inc. Been A Good Investment?

Verizon Communications Inc. has generated a total shareholder return of 5.6% over three years, so most shareholders wouldn't be too disappointed. Although, there's always room to improve. As a result, investors in the company might be reluctant about agreeing to increase CEO pay in the future, before seeing an improvement on their returns.

To Conclude...

Despite the positive returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about whether these returns will continue. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 2 warning signs for Verizon Communications that investors should be aware of in a dynamic business environment.

Switching gears from Verizon Communications, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.