In This Article:
Key Insights
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Estée Lauder Companies to hold its Annual General Meeting on 17th of November
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CEO Fabrizio Freda's total compensation includes salary of US$2.10m
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The total compensation is 509% higher than the average for the industry
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Estée Lauder Companies' three-year loss to shareholders was 54% while its EPS was down 3.4% over the past three years
The results at The Estée Lauder Companies Inc. (NYSE:EL) have been quite disappointing recently and CEO Fabrizio Freda bears some responsibility for this. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 17th of November. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. We present the case why we think CEO compensation is out of sync with company performance.
Check out our latest analysis for Estée Lauder Companies
Comparing The Estée Lauder Companies Inc.'s CEO Compensation With The Industry
At the time of writing, our data shows that The Estée Lauder Companies Inc. has a market capitalization of US$41b, and reported total annual CEO compensation of US$22m for the year to June 2023. That's a notable decrease of 14% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$2.1m.
In comparison with other companies in the American Personal Products industry with market capitalizations over US$8.0b, the reported median total CEO compensation was US$3.6m. This suggests that Fabrizio Freda is paid more than the median for the industry. Moreover, Fabrizio Freda also holds US$22m worth of Estée Lauder Companies stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
| Component | 2023 | 2022 | Proportion (2023) |
| Salary | US$2.1m | US$2.1m | 10% |
| Other | US$20m | US$23m | 90% |
| Total Compensation | US$22m | US$25m | 100% |
On an industry level, roughly 58% of total compensation represents salary and 42% is other remuneration. Estée Lauder Companies pays a modest slice of remuneration through salary, as compared 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.
The Estée Lauder Companies Inc.'s Growth
The Estée Lauder Companies Inc. has reduced its earnings per share by 3.4% a year over the last three years. It saw its revenue drop 10% over the last year.
The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..