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Here's Why Shareholders May Want To Be Cautious With Increasing Lowe's Companies, Inc.'s (NYSE:LOW) CEO Pay Packet

Key Insights

  • Lowe's Companies' Annual General Meeting to take place on 31st of May

  • CEO Marvin Ellison's total compensation includes salary of US$1.45m

  • Total compensation is 32% above industry average

  • Lowe's Companies' EPS grew by 11% over the past three years while total shareholder return over the past three years was 17%

Performance at Lowe's Companies, Inc. (NYSE:LOW) has been reasonably good and CEO Marvin Ellison has done a decent job of steering the company in the right direction. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 31st of May. However, some shareholders will still be cautious of paying the CEO excessively.

See our latest analysis for Lowe's Companies

How Does Total Compensation For Marvin Ellison Compare With Other Companies In The Industry?

According to our data, Lowe's Companies, Inc. has a market capitalization of US$124b, and paid its CEO total annual compensation worth US$18m over the year to February 2024. That's a modest increase of 4.0% on the prior year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.5m.

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On comparing similar companies in the American Specialty Retail industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$14m. Hence, we can conclude that Marvin Ellison is remunerated higher than the industry median. Moreover, Marvin Ellison also holds US$56m worth of Lowe's Companies stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component

2024

2023

Proportion (2024)

Salary

US$1.5m

US$1.5m

8%

Other

US$17m

US$16m

92%

Total Compensation

US$18m

US$17m

100%

Talking in terms of the industry, salary represented approximately 17% of total compensation out of all the companies we analyzed, while other remuneration made up 83% of the pie. It's interesting to note that Lowe's Companies allocates a smaller portion of compensation to salary in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

ceo-compensation
ceo-compensation

Lowe's Companies, Inc.'s Growth

Lowe's Companies, Inc.'s earnings per share (EPS) grew 11% per year over the last three years. Its revenue is down 11% over the previous year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's always a tough situation when revenues are not growing, but ultimately profits are more important. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Lowe's Companies, Inc. Been A Good Investment?

Lowe's Companies, Inc. has generated a total shareholder return of 17% over three years, so most shareholders would be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

To Conclude...

Seeing that the company has put up a decent performance, only a few shareholders, if any at all, might have questions about the CEO pay in the upcoming AGM. However, any decision to raise CEO pay might be met with some objections from the shareholders given that the CEO is already paid higher than the industry average.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 2 warning signs for Lowe's Companies you should be aware of, and 1 of them shouldn't be ignored.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.