In This Article:
Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
Les Wexner became the CEO of L Brands, Inc. (NYSE:LB) in 1963. First, this article will compare CEO compensation with compensation at similar sized companies. Then we'll look at a snap shot of the business growth. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.
View our latest analysis for L Brands
How Does Les Wexner's Compensation Compare With Similar Sized Companies?
At the time of writing our data says that L Brands, Inc. has a market cap of US$7.2b, and is paying total annual CEO compensation of US$4.6m. (This number is for the twelve months until February 2019). That's below the compensation, last year. While we always look at total compensation first, we note that the salary component is less, at US$1.0m. We examined companies with market caps from US$4.0b to US$12b, and discovered that the median CEO total compensation of that group was US$6.9m.
This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. However, before we heap on the praise, we should delve deeper to understand business performance.
You can see, below, how CEO compensation at L Brands has changed over time.
Is L Brands, Inc. Growing?
Over the last three years L Brands, Inc. has shrunk its earnings per share by an average of 18% per year (measured with a line of best fit). It achieved revenue growth of 3.3% over the last year.
Unfortunately, earnings per share have trended lower over the last three years. The fairly low revenue growth fails to impress given that the earnings per share is down. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. You might want to check this free visual report on analyst forecasts for future earnings.
Has L Brands, Inc. Been A Good Investment?
Given the total loss of 55% over three years, many shareholders in L Brands, Inc. are probably rather dissatisfied, to say the least. So shareholders would probably think the company shouldn't be too generous with CEO compensation.
In Summary...
It looks like L Brands, Inc. pays its CEO less than similar sized companies.
Shareholders should note that compensation for Les Wexner is under the median of a group of similar sized companies. But then, EPS growth is lacking and so are the returns to shareholders. Considering all these factors, we'd stop short of saying the CEO pay is too high, but we don't think shareholders would want to see a pay rise before business performance improves. Whatever your view on compensation, you might want to check if insiders are buying or selling L Brands shares (free trial).