Tom Werner became the CEO of Lamb Weston Holdings, Inc. (NYSE:LW) in 2016, and we think it’s a good time to look at the executive’s compensation against the backdrop of overall company performance. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Lamb Weston Holdings.
Check out our latest analysis for Lamb Weston Holdings
How Does Total Compensation For Tom Werner Compare With Other Companies In The Industry?
Our data indicates that Lamb Weston Holdings, Inc. has a market capitalization of US$12b, and total annual CEO compensation was reported as US$6.7m for the year to May 2020. That is, the compensation was roughly the same as last year. While this analysis focuses on total compensation, it’s worth acknowledging that the salary portion is lower, valued at US$1.0m.
In comparison with other companies in the industry with market capitalizations over US$8.0b , the reported median total CEO compensation was US$13m. This suggests that Tom Werner is paid below the industry median. What’s more, Tom Werner holds US$25m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Talking in terms of the industry, salary represented approximately 24% of total compensation out of all the companies we analyzed, while other remuneration made up 76% of the pie. In Lamb Weston 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.
Lamb Weston Holdings, Inc.’s Growth
Over the past three years, Lamb Weston Holdings, Inc. has seen its earnings per share (EPS) grow by 1.1% per year. Its revenue is down 4.2% over the previous year.
We generally like to see a little revenue growth, but it is good to see a modest EPS growth at least. In conclusion we can’t form a strong opinion about business performance yet; but it’s one worth watching. 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 Lamb Weston Holdings, Inc. Been A Good Investment?
Most shareholders would probably be pleased with Lamb Weston Holdings, Inc. for providing a total return of 41% over three years. 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.
As we noted earlier, Lamb Weston Holdings pays its CEO lower than the norm for similar-sized companies belonging to the same industry. However, shareholder returns are rock solid over the past three years, and that’s undoubtedly a good sign. As a result of the juicy return to investors, CEO compensation may well be quite reasonable.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 1 warning sign for Lamb Weston Holdings that investors should look into moving forward.
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. 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.
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