Shareholders Will Probably Hold Off On Increasing Ameren Corporation's (NYSE:AEE) CEO Compensation For The Time Being

Key Insights

• Ameren's Annual General Meeting to take place on 9th of May
• CEO Marty Lyons' total compensation includes salary of US$1.20m
• Total compensation is similar to the industry average
• Ameren's EPS grew by 7.0% over the past three years while total shareholder loss over the past three years was 3.7%

In the past three years, the share price of Ameren Corporation (NYSE:AEE) has struggled to generate growth for its shareholders. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. The AGM coming up on the 9th of May could be an opportunity for shareholders to bring these concerns to the board's attention. They could also influence management through voting on resolutions such as executive remuneration. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

Check out our latest analysis for Ameren

Comparing Ameren Corporation's CEO Compensation With The Industry

According to our data, Ameren Corporation has a market capitalization of US$20b, and paid its CEO total annual compensation worth US$9.0m over the year to December 2023. Notably, that's an increase of 22% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.2m.

For comparison, other companies in the American Integrated Utilities industry with market capitalizations above US$8.0b, reported a median total CEO compensation of US$9.6m. So it looks like Ameren compensates Marty Lyons in line with the median for the industry. What's more, Marty Lyons holds US$14m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	US$1.2m	US$1.1m	13%
Other	US$7.8m	US$6.3m	87%
Total Compensation	US$9.0m	US$7.4m	100%

On an industry level, roughly 13% of total compensation represents salary and 87% is other remuneration. Our data reveals that Ameren allocates salary more or less in line with the wider market. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Ameren Corporation's Growth

Over the past three years, Ameren Corporation has seen its earnings per share (EPS) grow by 7.0% per year. It saw its revenue drop 5.8% over the last year.

We generally like to see a little revenue growth, but the modest improvement in EPS is good. It's hard to reach a conclusion about business performance right now. This may be one to watch. 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 Ameren Corporation Been A Good Investment?

Since shareholders would have lost about 3.7% over three years, some Ameren Corporation investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too 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. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 2 warning signs for Ameren (1 can't be ignored!) that you should be aware of before investing here.

Switching gears from Ameren, 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.